WEST BANK: Palestinians in the West Bank struggle with inflation and soaring prices

Record ID: 561497

  • Title: WEST BANK: Palestinians in the West Bank struggle with inflation and soaring prices
  • Date: 2nd May 2008
  • Summary: MARKET/ BOY LOOKING INTO CAMERA
  • Embargoed: 17th May 2008 13:00
  • Keywords:
  • Topics: Industry
  • Reuters ID: LVAAY4BHG9J4UDELKJDKDK094S5Y
  • Story Text: Palestinians in the West Bank, along with many others in some Arab countries, struggle with inflation and soaring food prices.
    While Gulf Arab oil producers reap windfall earnings, their poorer cousins elsewhere in the Arab world are struggling with soaring energy and food bills.
    Inflation has surged in Gulf countries, fuelled partly by lavish spending of record oil and gas revenues. This is also spurring demand for everything from housing to power and water.
    But wrestling with rising prices is a grimmer business in Arab cities not cushioned by oil wealth.
    Across the West Bank, consumers complain that prices are raising on a daily basis, and as a result, many stores and supermarkets must adjust their prices regularly.
    The Head of the Economics and Administration Department at al-Najah University in Nablus, Tareq al-Haj, puts the rising prices in the Palestinian territories down to a number of factors.

    "Sadly, the first reason for this is that we are moving towards working for daily wages in other markets, and especially the Israeli one. So many of us are no longer working in agriculture and our consumer basket in Palestine, which very much depends on agriculture, contains produce which is no longer grown in Palestine. It is now imported," al-Haj explained.

    "We are the only people in the world who do not have a currency, and at the same time we do not have a central bank to deal with monetary policy in the country. We deal in three main currencies, U.S. dollars, Jordanian dinars and Israeli shekels," he added.
    Food price rises hit the poor hardest in the Middle East, as in other food-importing developing countries around the world.
    At a market in Hebron, many complain that their buying has fallen considerably.

    "If we compare the prices this year with those from a couple of years ago, today they are very expensive. Now, tomatoes are four to four and a half shekels (about 1.15 - 1.3 U.S. dollars) a kilo. Last year it was one shekel (about 0.29 U.S. dollars) for the best tomatoes. Lemons are also very expensive at eight shekels a kilo," said Ahmad Sharaf.

    "Everything is expensive now, especially vegetables. Staples, such as wheat, rice and sugar are also expensive. You can't go without tomatoes, and now you get one kilo for what used to be the price of three," added Ismael Natsha, a resident of Hebron.
    Inflation has jumped across the Middle East. In Saudi Arabia, the yearly rate hit 8.7 percent in February, a 27-year high.
    A regional average compiled by the Economist Intelligence Unit and not weighted for gross domestic product put inflation in the Middle East and North Africa at 8.9 percent last year.
    Nevertheless, the problem is global and will not go away with the World Food Programme (WFP) reporting price rises of 40 percent in the past nine months for the grains, pulses and vegetable oil it buys.
    In the Palestinian territories, this problem is compounded by the falling value of the Jordanian dinar, which is widely used in the West Bank and which is pegged to the dollar.

    "The difference in the value of the dinar, which is pegged to the dollar, has cost the Palestinian 40 percent of his salary. That is to say, one who used to earn 1,000 Jordanian dinars, now earns only 600 in real terms and in terms of buying power. Prices in Palestine have gone up by 37 percent, so if we add this 37 percent to the other 40 percent, this means that there is a 77 percent drop in the buying power of those who have Jordanian dinars,"
    said al-Haj.
    Consumers now face tough choices as food takes a bigger chunk of family budgets, perhaps leaving less for health and education.

    "The price hikes affect the producers and the consumers, so most consumers, and I am one of them -- I can't buy fruit because I don't have the income to be able to buy at these prices," said Nimr Atta, who was shopping in Nablus.

    "The economic situation is very bad. The prices are going up on a daily basis. These price rises indicate that there is a drought affecting our lands," added Riad Nima, a stall owner.
    The WFP says Gulf states should consider donating more to international agencies trying to assuage poverty in the region.
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