Country: Yemen Source: Food and Agriculture Organization of the United Nations Please refer to the attached file. KEY HIGHLIGHTSCONTEXT: Yemen's food security is facing significant pressure from a number of complex and overlapping threats. In Government of Yemen (GoY) areas, a collapsing currency is driving up food and fuel prices. Concurrently, Sana'a Based Authority (SBA) areas are dealing with strict market controls. The designation of the Central Bank in Sana'a as an FTO (Foreign Terrorist Organization) and related sanctions have severely disrupted the banking sector, impacting payment systems, remittances, and international transfers. These issues are compounded by a widespread wage collapse and seasonal challenges, further worsened by a ban on wheat flour imports. The recent escalation of the Middle East crisis presents an additional risk of increased fuel prices. Even though milling capacity and port infrastructure are generally adequate, potential fuel shortages in SBA-controlled areas could interrupt milling operations, leading to higher wheat flour prices despite existing controls. Finally, the substantial decrease in imports—including food, fuel, and other non-food items—flowing through the main Hodeidah Port is a major concern that could disrupt markets and further threaten food security.EXCHANGE RATES: In June 2025, the Yemeni riyal (YER) in Government of Yemen (GoY)-controlled areas continued to depreciate, averaging 2,628 YER/USD, reflecting a 32% decline year-on-year and a 4% decrease from May. Meanwhile, the currency remained stable at 534 YER/USD in areas controlled by the Sana’a-based authorities (SBA), primarily due to central bank interventions.FOOD PRICES: Food prices in GoY-controlled areas continued to rise slightly monthon-month, while SBA areas experienced a notable increase for the first time, despite price controls, driven by market pressures from reduced imports and financial constraints. Year-on-year, food inflation was more pronounced in GoY areas, largely due to a weaker currency and higher fuel costs. In SBA areas, food prices increased moderately, indicating potential further inflation risks.MINIMUM FOOD BASKET (MFB): In GoY-controlled areas, the cost of a Minimum Food Basket (MFB) has increased substantially, now 37% higher year-on-year and 49% above the three-year average. In contrast, in SBA areas, MFB costs rose by 4% monthon-month and year-on-year, yet remain 9% below the three-year average. Despite moderate increases in nominal food prices like rice, populations in SBA areas are experiencing a significant decline in purchasing power due to hidden inflation, and income loss.FOOD AND FUEL IMPORTS: Wheat grain imports via the Northern Ports increased, while imports of wheat and wheat flour through Aden declined. Fuel imports decreased at Ras Issa and Aden ports but rose in Al Mukalla. Although SBA port imports month-onmonth improved due to the recovery of Salif Port, the total wheat imports through SBA ports in the first half of the year remained 22% lower than the same period last year. This decline is primarily due to reduced imports through Hodeidah Port, which was heavily impacted by a series of airstrikes that damaged port infrastructure, disrupted operations, and decreased its capacity.FUEL PRICES: Fuel prices largely remained stable month-on-month in both controlled areas. However, in GoY-controlled areas, prices saw significant year-onyear increases—between 22% and 30% above June 2024, and 34% to 53% above the three-year average—primarily driven by currency depreciation and supply disruptions. Further price increases are expected in GoY areas, which could lead to higher food costs due to increased transportation expenses.CASUAL LABOR WAGE RATES: Casual labor wages remained stable or saw modest increases month-on-month in both areas. In GoY-controlled areas, wages increased by 15-19% year-on-year and are 27-31% above the three-year average. In SBA areas, wages rose by only 2-5% over similar periods. Despite these gains, many casual laborers continue to struggle to afford essential food due to ongoing inflation and limited employment opportunities.TERMS OF TRADE (ToT): The terms of trade (ToT) for livestock-to-cereal improved in GoY-controlled areas, surpassing both the previous month and the three-year average. In contrast, ToT declined in SBA areas due to a significant fall in livestock prices and rising cereal prices. The labor-to-cereal ToT remained stable in SBA areas but was lower in GoY areas compared to both the previous year and the three-year average. These trends reflect rising fuel and flour prices alongside falling livestock prices in SBA areas. In GoY areas, the increase in livestock values outpaced the rise in cereal prices, while casual labor rates remained slightly above wheat flour prices.LIVESTOCK PRICES: Livestock prices in GoY-controlled areas rose sharply—by 19-24% month-on-month and over 50% year-on-year—while in SBA areas, prices declined by 9-13% month-on-month and 22-24% year-on-year. The decrease in SBA areas is due to reduced demand during Eid al-Adha and the adverse effects of poor rangeland conditions.