Food prices continue to drop in Afghanistan, WFP report says

A shopkeeper in Balkh province, north of Afghanistan. FILE PHOTO

According to a recent report by the United Nations’ World Food Programme (WFP), food inflation in Afghanistan has continued to decrease from 26 percent in June 2022 to 3.2 percent in January 2023.

This decline in inflation has been accompanied by a decrease in the prices of basic household items on a year-on-year basis.

The report highlights that the declining trend in global food prices since mid-2022 has played a significant role in easing inflationary pressures in Afghanistan. The stability of the Afghan currency (AFN) has also contributed to this positive development.

The AFN began to stabilize between January and March 2022, supported by UN cash shipments and strong controls on the illegal export of foreign currency by the ruling Taliban.

The appreciation of the AFN against foreign currencies is seen as a positive development for the economy, as it can help stabilize prices and improve household purchasing power, WFP reported.

According to the agency, Afghanistan’s exports in the first quarter of 2023 totalled $500 million, representing a growth of 7 percent compared to the same period last year. While food exports continue to account for a significant portion of national exports, there has been an increase in the share of textile merchandise, which now represents 15 percent of all exports.

However, challenges persist in Afghanistan’s food market, which is highly susceptible to price shocks on the international market. The report emphasized that when food prices increase, it has a significant impact on households, small businesses, and macroeconomic growth in the country.

Global cereal prices have been declining since their peak in May 2022 but remain elevated compared to 2021. The prices of Kazakhstan’s wheat grain exports, which are a staple for Afghanistan, have stabilized since their peak in June 2022. However, restrictions on grain exports from Russia to Central Asian countries, including Kazakhstan, have impacted imports and significantly reduced grain exports throughout the region, including Afghanistan.

The report also highlights the importance of the Black Sea Grain Initiative (BSGI) in facilitating grain exports and helping to lower global food prices. The BSGI, a deal between the Russian Federation, Ukraine, Turkey, and the United Nations, ensures the export of grain, other food commodities, and fertilizer from three Ukrainian ports on the Black Sea.

In addition to the analysis of food inflation and exports, the WFP report provides insights into the impact of restrictions on female workers, food consumption, coping strategies, incomes, food expenditure, access to markets, and healthcare. The report indicates that a significant proportion of households are aware of the restrictions on female workers, and many have experienced a negative impact on their sources of income. Food insecurity remains a major concern, with the majority of the population not having adequate food consumption and dietary diversity.

Restrictions on Female Workers

The WFP report sheds light on the impact of restrictions on female workers in Afghanistan and reveals that a significant proportion of households (79 percent) are aware of the limitations imposed on female employment. Among those surveyed, approximately two-thirds (61 percent) reported experiencing a significant negative impact or even the loss of their primary sources of income due to these restrictions.

In addition, an overwhelming majority of households (95 percent) consider humanitarian assistance to be crucial for their family and livelihood, highlighting the importance of support in mitigating the economic challenges faced by households affected by the restrictions.

Food Consumption

The report underscores the persistent issue of food insecurity in Afghanistan, with eight out of ten households continuing to face this challenge. While there has been a slight improvement in food consumption over the recent quarter, the majority of the population (87 percent) still lacks adequate food consumption and dietary diversity.

Furthermore, households have consistently allocated more than 80 percent of their income towards food expenses in the past six months. In the regional analysis, the north, encompassing provinces such as Balkh, Faryab, Jawzjan, Samangan, and Sar-e-pul, had the highest share of income spent on food, with 89 percent. While key food commodity prices remained stable, the high levels of unemployment continue to strain the financial status of households.

Notably, female-headed households, facing increasing restrictions on access to public spaces and higher unemployment rates, spent 8 percentage points more of their income on food compared to male-headed households.

Job losses and food shortages remain significant concerns for Afghan households. More than half of the surveyed households (52 percent) expressed worry about losing job opportunities, followed by concerns about food shortages (22 percent), and increases in food prices (6 percent). The level of concern regarding food shortages has doubled since August 2021. While there has been a decreasing trend in major food commodity prices, they still remain high compared to August 2021.

The limited job opportunities exacerbate households’ challenges in accessing food and maintaining purchasing power, particularly for those already living below the poverty line.

Accessing markets is another obstacle faced by Afghan households, with one in four reporting difficulties. The main reasons hindering market access include long distances to markets and travel restrictions, accounting for 18 percent and 2 percent of the responses, respectively.

These findings highlight the ongoing challenges faced by Afghan households, especially regarding restrictions on female workers, food insecurity, job losses, and limited market access. The WFP report underscores the need for continued support and humanitarian assistance to address these pressing issues and improve the overall well-being of the population.