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World Bank: Rising Commodity Prices Cause High Inflation Rates in Libya

September 4, 2022
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The World Bank said that the rise in the prices of basic goods and services was the main contributor to the rise in official inflation rates in Libya since 2021.

In a report issued on Thursday, the World Bank attributed the high inflation rate to disruptions in supply chains due to internal conflict, health measures related to the COVID-19 pandemic. As well as relying on costly alternative sources of water supply and electricity generation to increase prices.

The report pointed to the Russian-Ukrainian crisis role to inflationary pressures in the past months through its impact on food prices, as Libya relies heavily on wheat and grain imports from both countries.

Following the outbreak of the Russian-Ukrainian crisis, the food inflation rate in the minimum expenditure basket rose to 40.6% on an annual basis in April 2022 before declining to 31% in May 2022, a rate that is still high, according to the report.

The World Bank added that the average cost of food in the minimum expenditure basket in May 2022 was 14% higher than it was before the crisis in February 2022, and the cheapest flour brand recorded a 17% increase in its prices in May 2022 compared to February 2022. Meanwhile, the prices of couscous and bread in May 2022 increased by 80% and 34%, respectively, compared to February 2022.

Notably, Libya imports an estimated 650,000 tons of wheat from Russia and Ukraine, half of its annual needs. The North African country consumes about 1.26 million tons of grain annually, and imports 95% of soft wheat. This makes it vulnerable to fluctuations in the international market.

The United Nations’ (UN) Food and Agriculture Organisation (FAO) said that Libya relies heavily on imports by 90% of its need to cover its cereal consumption requirements, mostly wheat for human consumption and barley for feed.

Between 2016 and 2020, Libya sourced over 30% of its wheat imports from Ukraine, and 20% from Russia, according to the FAO. Almost 65% of total maize imports of 650, 000 tonnes, and 50% of total barley imports of 1 million tonnes originated from Ukraine, making the North African vulnerable to disruptions in shipments from the Black Sea region.

Tags: Commodity PricesCoronaVirusCovid-19libyaWorld bank
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