The present price hike exceedingly witnessed in Ethiopia is the highest increase ever seen as a result of a number of economic sabotages commenced long back following the Tigray Peoples Liberation Front (TPLF)-led maladministration aiming at meeting the ill-intended mission the group planed since its inception.
A range of business enterprises or organizations of all sorts strive to satisfy the consumers directly and indirectly in the world of internationalization, competition or consumerism. However, amidst such a promising effort to quench clients or customer demand, the price hike of necessary food commodities has a major impact on food security particularly on the low-income section of the society in Ethiopia.
The government also intensified market monitoring to control the artificial price hike of goods and the sale of inedible goods in the market. Its officials also try to improve the supply system in the just set in New Year.
This writer talked to Teshome Abagaro, an economist graduated from Haramaya University, to have expert view regarding the high cost of living and the potential remedies to contain it. He said, “Current raise in domestic cost of production of food, together with high price in international market may boost up further food inflation, leaving adverse effects on the poor in particular. As a result, the majority of the population in the country these days has spent more than half of their income purchasing daily consumption including food items.”
According to Teshome, price hikes for essential commodities can force citizens to cut back on the quantity or quality of their food as well as change their consumption patterns.
“Price hike of essential commodities has been a matter of constant concern for the people of Ethiopia in general and the poor and the fixed wage earner in particular. Due to increase in food prices, inflation is causing a range of devastating aspects.With a view to containing the ever-increasing price hike in the country, the government has been devising possible mechanisms such as importing basic commodities like wheat, sugar, oil and others tax free. Even spaghetti and macaroni are made free from value added tax. Besides, it has been taking relevant measures against businessmen creating artificial price hikeetc,” he said.
It is well comprehended that the prices of all commodities like cereals, vegetables, commodities for daily consumption and other necessary ingredients has been alarmingly rising. Basically, stabilizing the market and successfully containing the high cost of living in Ethiopia should not be left only to the government and other concerned bodies as it badly demands the combined effort of all.
As to him, without a shadow of doubt, sustainable and long term price stabilization policies have to be put in place in particular with a view to well addressing supply side constraints. Surprisingly, if the food inflation index in this country rises once, it has never shown a sign of coming down. The prices of essential food items are highly skyrocketing. Though the pinch is felt by every household, the poorest segments of the society are understandably the worst affected.
He further elucidated that the prices of commodities are rising day in and day out, if consumers buy certain commodity today, they will buy the same thing with a dramatic increase after two or three hours let alone waiting for days and weeks. It is well known that the majority of the population dwelling in urban areas such as Addis Ababa have led life running menial works, and could hardly resist the impacts of high cost of living.
“It is really a promising and responsible move for the rich and officials to put themselves under the low-income families’ shoes and feel the pain as they might at least take prompt measures to safely pass the bad time the country has been facing following the entrenched conspiracy orchestrated by the irresponsible TPLF accompanied with the impact of COVID-19,” Teshome said.
Obviously, the prices every household has been paying for essential food items have increased across the spectrum and this situation in turn has naturally resulted in a change in consumption habits. For instance, the mushrooming food budget has invariably led households to cut costs in other facets such as clothing, healthcare, transportation and refreshment.
He further stated that the price of individual food items has also shown a significant reduction following the swift measure the government has recently taken in a bid to arrest the prevalence of the rate of inflation.
He further said, “It is easy to imagine how severe the problem could have been and to what intensity many would have been suffering from unbearable hurdles hadn’t Addis Ababa city administration implemented a large-scale housing program aimed at improving the living standard of the urban low and middle-income households through the construction of condominium houses though not sufficient.”
As to him, the government has trekked a viable step in due course of easing citizens burden following high cost of living as the country is facing various aspects of problems including high cost of living emanating from inflation though a temporal scene, housing shortage and highly skewed income disparity, high rate of unemployment, among others.
He said, “As to me, the government has to well consolidate what it has commenced regarding market stabilization through lucrative means to come up with potential remedies for the high cost of living emanating from the ever-rising inflation. Principally, policies that can potentially help the nation stabilize the market have to be promulgated and put into actions.
“Second, all means have to be exploited to increase production and productivity at local level by which the farming community can be active practitioners and direct suppliers of products with a minimum cost.
“Third, a well streamlined and transparent commodity exchange system should be practically applied. If the producing segments of the society are provided with opportunities to present their produces in a well-organized manner and can get the benefit out of their production over the advantage of the illegitimate brokers’ unlawful enrichment, the rate of high cost of living can be prettily reduced,” Teshome suggested.
The federal, state, and local governments seek to assist poor households financially using transfers, minimum wage laws, and subsidies for important goods and services. In so doing, it will be possible to stabilize the market, let citizens lead a relatively steady life and gain a sigh of relief to get the economy much more recovered and foster socio-economic transformation this new fiscal year, he opined.
Besides, pro‐market reforms in urban and rural areas could significantly reduce living costs for the poor and improve labor mobility and job matching. With the federal budget deficit growing and demands for radical labor‐market policies proliferating, a coordinated move would represent an economically efficient means of improving the well‐being of the poor without requiring more government spending or intervention.
Teshome said, “Reform can be politically challenging. However, we, as a country, should aspire to undo the damage caused by various factors like COVID-19 impact, the law enforcement operation in the Northern part of the county, flood catastrophe and other related manmade and natural calamity.
Teshome added that as the increase in food and non-food prices erodes the purchasing power of the poor, promoting import substitution and buttressing home grown economy has to be the lasting remedy to well withstand the high cost of living. Hence, the government and other stakeholders have to move in unison to push the country forward overcoming all ups and downs.
In a nut shell, the multifarious challenges Ethiopia has now been facing are temporary ones. If the collaborative effort of all, the unity and fraternity of each and every citizen and the rate of growth and change registered in the country keep at the same rate, Ethiopia will seize the ladders of success within the shortest time possible. All in all, high cost of living can be overcome employing firm cooperation; assisting one another and discharging citizens’ respective responsibilities to meet two ends—Getting national economy grow and defeating poverty.
BY MENGESHA AMARE
ETHIOPIAN HERALD 19 SEPTEMBER 2021
