Inflation Spiraling
The general inflation rate rose to 19.4 percent in the past year, while foodstuff inflation jumped to 36.6 percent, with the former recording a nine percent increase and the latter 30.7 percent, as compared to 2004, according to an official quarterly report.
The economic development report issued by the Ministry of Planning and International Cooperation attributed the high inflation rate to fuel price hikes and national currency decline. It confirmed that transportation and agriculture were the most affected sectors due to increasing prices of fuel products, as the transportation inflation rate spiked from one percent in June 2005 to 31.6 percent in September of that same year.
According to the report, skyrocketing transportation fares helped raise inflation rates in all production and handicraft sectors, as well as increase agricultural production costs, as plant irrigation depends on diesel pumps.
The report added that the Yemeni Riyal fell 3.5 percent in January 2005 compared to the dollar, which helped raise commodities prices, particularly imported items. This fact coincided with monetary supply growth, which mounted to YR 975 billion, accounting for 42.2 percent of gross domestic product.
