Situation Report

Inflation continues to increase raising concerns about food security

Sudan inflation rate

The annual inflation rate continues to increase in Sudan and reached 64.3 per cent level in January 2020, according to the latest update from the Central Bank of Sudan (CBoS). The rate increased from 57% in December 2019 and is the second highest since December 2018 when it reached 73 per cent.

High and increasing inflation is contributing to soaring costs of agricultural production, according to the newly released 2019 FAO Crop and Food Supply Assessment Mission (CFSAM) to Sudan. The prices of locally produced sorghum and millet in most markets have been characterized by an upsurge during the last 12 months, due to the high costs of production and transportation, depreciation of the local currency and increasing inflation that started at the end of 2017. In December 2019, prices of sorghum and millet were from 65 to 130 per cent higher than their levels of one year before, the CFSAM report said.

The inflation rate started to increase in Sudan from January 2018 when it more than doubled to 52 per cent from 25 per cent in December 2017. Throughout 2018 the rate was above 50 per cent and hit 73 per cent in December 2018. While it dropped sharply to 43.5 per cent in January 2019, by July 2019 it reached above 50 per cent level and continued to increase.

Increasing inflation rate is a major concern for millions of people who are food insecure and need food and livelihoods assistance. According to the August 2019 report by the Integrated Food Security Phase Classification (IPC), an estimated 17.7 million people (42 per cent of the total assessed population) are experiencing moderate/borderline and acute food insecurity. This includes 11.8 million people experiencing Stressed levels (IPC Phase 2) and 5.8 million people (14% of the total population) experiencing Crisis or worse levels of food insecurity (IPC Phase 3 and above) and are in need urgent action. This figure of 5.8 million acute food insecure people is the highest on record since the introduction of the IPC analysis in Sudan. Around 1 million individuals are facing Emergency levels of acute food insecurity (IPC Phase 4) and around 4.8 million individuals are in Crisis (IPC Phase 3)).

As a result of the economic crisis, the number of households classified as food insecure (a proxy indicator for poverty) increased by 63 per cent, from 3.8 million in 2017 to 6.2 million in 2019 (IPC and HNO). This was driven in part by the four-fold increase in the cost of a local food basket (LFB). The impact has been severe on both urban and rural populations, though the latter have been more acutely affected, with 53 per cent of rural households not able to afford a single LFB compared to 38 per cent of urban households, according to the Comprehensive Food Security & Vulnerability Assessment (CFSVA) 2019. In addition, in both urban and rural locations, around half of all households have had to resort to some form of livelihood coping strategy, with similar proportions relying on stress coping strategies (12-13 per cent) but significantly higher proportion of rural household resorting to more severe emergency coping strategies (21 per cent compared to 14 per cent in urban areas), CFSVA report said. These coping mechanisms include skipping or reducing meals, cutting expenses on education, including removing children from school, and health as well as selling available assets or borrowing from extended support networks.

It is expected that subsidy reforms will result in commodity price increases. These price increases will have the most severe impact on those who are already the most vulnerable, including the rural poor. Without additional support, more households will have limited access to basic services and resort to coping strategies, leading to further asset depletion and potentially impacting longer term human capital development.

In 2020, about 9.3 million people in Sudan will need humanitarian assistance and protection. This represents almost one in every four people in Sudan. The UN and partner organizations aim to assist 6.1 million of the most vulnerable people in Sudan through the Humanitarian Response Plan (HRP) 2020 requiring US$1.35 billion from donors.