Unprecedented spike in food and fuel prices in Yemen due to the Houthis' attack of international maritime shipping

The United Nations has said that the increase in shipping and insurance costs will impose escalating pressures on the prices of basic food items, fuel, and other imported goods in Yemen in the coming period, due to the continued disruption of international trade and maritime shipping by the Iran-backed Houthis, who have been carrying out attacks using ballistic missiles and drones against commercial ships in the Red Sea, Bab al-Mandab, and the Gulf of Aden since November 19th.

A report by the United Nations Office for the Coordination of Humanitarian Affairs expects prices to start rising in the short term (1-3 months), noting that so far, no increases in local prices have been observed due to the usual delay caused by existing stocks, especially in areas controlled by the Houthis.

On the 14th of this month, the Director of Operations and Advocacy at the United Nations Office for the Coordination of Humanitarian Affairs, Edem Wosornu, said in a briefing to the Security Council that reports received by the office indicate that transportation costs to the ports of Hodeidah and Aden have significantly increased since November due to ongoing hostilities.

The United Nations World Food Programme (WFP) has reported increases of up to 110% for container shipments to Yemen. Other humanitarian organizations have seen shipping price increases of up to 318%.

The UN official confirmed that Yemen's fragile economy originally cannot handle any more major shocks. In areas controlled by the internationally recognized government, the value of the Yemeni rial deteriorated even further, reaching its lowest level in over two years at 1514 rials to the dollar, leading to a decline in the purchasing power of the average family.

This year, more than 18 million people, which is more than half of the population, will need humanitarian assistance and protection services in Yemen. It is expected that 17.6 million people will suffer from severe food insecurity.

The Managing Director of the International Monetary Fund, Kristalina Georgieva, pointed out at the Eighth Forum on Public Finance in Arab Countries held in Dubai on February 15th, the implications of the conflict in the Middle East through the increasing shipping costs and decreasing ship traffic in the Red Sea by over 40% this year.

"This contributes to escalating challenges across economies that are still on the path to recovery from previous shocks. The longer the conflict lasts, the greater the risks that threaten to widen the circle of conflict and exacerbate economic damage". Gorgieva said.

The United States and Britain have been carrying out targeted airstrikes against military sites in Houthi-controlled areas, including ballistic missile launch pads, since January 12th in response to attacks in the Red Sea, escalating tensions and unrest in the region amid Israel's ongoing war on Gaza since October 7th.