Yemen inflation hits 15-month high
Dubai, September 2, 2013
Yemen's annual inflation climbed to a 15-month high of 14.2 per cent in May, mainly due to increases in food, tobacco and qat prices, while June foreign currency reserves fell to their lowest level since August 2012.
Inflation had retreated from a peak of 25 per cent in October 2011 to as low as 5.5 per cent last November as the economy started picking up after two years of political unrest. But price growth rebounded again to hit 14 per cent in April.
On a monthly basis, prices grew 0.3 per cent in May, down from a 0.6 per cent rise in April, central bank data showed on Monday.
Food inflation in the poor Arabian Peninsula state edged up to 16.6 per cent year-on-year, its highest level since January 2012, from 16.3 per cent in April.
Annual price growth of tobacco, cigarettes and qat, a mild stimulant leaf that many of Yemen's 25 million people chew daily, accelerated to a 15-month high of 27.1 per cent in May from 26.6 per cent in the previous month.
Excluding food and qat, annual consumer price inflation was 6.3 per cent in May, unchanged for the third consecutive month.
The central bank cut interest rates by 5 percentage points between last October and February to support an economic recovery. Its head said in April that he was comfortable with the current level of rates - a three-year low of 15 per cent.
The International Monetary Fund forecast in April that Yemen's inflation would average 7.5 per cent in 2013, down from 10.2 per cent in 2012.
The central bank's gross foreign assets fell to a 10-month low of $5.7 billion in June, or 6.1 months of imports, from $5.8 billion, or 6.2 months of imports, at the end of the previous month, the data also showed.
Yemen, the second poorest Arab state after Mauritania, depends on crude oil exports to replenish its foreign currency reserves and cover up to 70 per cent of the government budget.
But frequent attacks on pipelines by disgruntled tribesmen have affected government revenues. The last bombing occurred on Sunday causing oil flows to stop.
Saudi Arabia provided a $1 billion loan to beef up Yemen's central bank reserves last year but other foreign aid out of $7.9 billion pledged by donors in 2012 has been slow to arrive.
The country's oil exports rose 2.8 per cent month-on-month to $212 million in June, however, they plunged nearly 45 per cent when compared with a year ago, the data showed. - Reuters