In 2021, countries started easing movement restrictions, tourism sector witnessed an upturn, and demand was boosted leading to increasing oil prices that was in favor of oil exporting countries. Accordingly, the region reported an average annual increase of 9.8 percent of GDP in 2021 compared with 8.6 contraction in 2020.

• Several countries in the region witnessed price increases between June 2021 and December 2021 led by global food inflationary pressures. According to the cost of food basket, a proxy for food inflation rates, Lebanon reported the highest annual increase of 351 percent in December 2021, followed by Syria (97 percent), and Yemen (81 percent) with notable discrepancies between Internationally Recognized Government and Sanaa-based authorities areas of control.

• Increasing food prices were not only limited to staples but were also reported for nutritious food such as vegetables and fruits, protein, pulses and nuts, and dairy products. A continuous increase in food prices, especially the nutritious ones put the vulnerable population at higher risk of malnutrition.

• A comparison for the food basket cost in the region is feasible by converting the cost of food basket from local currency units into USD. Turkey, Jordan, Armenia, and Libya were continuously reporting the highest food basket cost in USD terms throughout the second half of 2021.

• Purchasing power of households is eroded by fluctuations in prices (reflected in the cost of the food basket) and decreasing share of value of assistance to the food basket cost. In countries experiencing severe depreciation of their currency or relatively higher inflation rates, the share of food transfer value to food basket cost is relatively low. This is the case for Yemen, Turkey, Syria, Lebanon, and Libya.

• The FAO Food Price Index (FFPI), a measure of the monthly change in international prices of a basket of food commodities, continued increasing in the second half of 2021. FFPI spiked 23 percent year-on-year in December 2021 and 30 percent was the average annual increase in the second half of the year. Supply chain disruptions, congestion and delays at ports, scarcity of labor and commodities, increasing global crude oil prices, and unfavorable weather conditions, all combined contributed to the rise in food prices.

• The final impact on each country in the region varies according to different risk factors such as domestic production levels vs relative dependency on imports and the rate of change in domestic prices. A risk analysis is conducted in this report where each country is assigned a risk category based on these risk factors. No single country in the region falls into the Low-risk category. Lebanon, Syria, Yemen, and Libya fell within the High-risk category for inflationary pressures and/or the relatively high import dependency ratios for wheat and/or vegetable oils. The remaining countries fall into the Medium-risk category.

Source: World Food Programme