As Ramadan arrives, inflation chokes Morocco, Algeria, Tunisia

With Ramadan starting, households in Morocco, Algeria and Tunisia will be struggling to supply their pantries. Ongoing inflation has pushed up food prices and caused shortages.

Inflation was supercharged by the Russian invasion of Ukraine in February 2022. Morocco, Tunisia and especially Algeria are key wheat importers and saw higher prices weigh down state budgets during 2022.

Higher prices for fertilizers and transportation have also pushed up food production costs globally. But in Morocco, Algeria and Tunisia, the weeks leading up to Ramadan typically add to inflation, as households stock up for festivities during the holy month.

Algeria’s national statistics agency reported overall annual inflation at 9.49% in January, and food inflation reached 13.53%. Algerians have been especially penalized by the price of fresh goods, which in the capital, Algiers, jumped by 23.58% year on year.

The country spends over $10 billion yearly importing food, according to estimates by the United States Department of Agriculture. Main imports include cereals, powdered milk, cooking oil and sugar. 

But Algeria’s inflation has also been driven by an injection of money into the system, after higher energy prices raised the country’s oil and gas export revenues. Mourad Ouchichi, an economist and lecturer at the University of Bejaïa in Algeria, told Al-Monitor, “This money is being distributed through a nominal increase in salaries and unemployment benefits. The government is using the money to buy social peace, and this has added to inflation.”

Some key ingredients for Ramadan are especially weighing down on Algerians. The price of onions in January rose by more than 96% year on year, while orange prices jumped by 70%. Lamb meat and egg prices rose by 43% and 33% respectively, according to figures by the national statistics agency.

Annual inflation in Tunisia reached 10.4% in February, with food prices growing by 15.6%. The country's economic crisis has devalued the currency and left the cash-strapped government often unable to pay for imports of subsidized goods. This has led to cyclical shortages and higher prices.

On average, household consumption in Tunisia rises by 34% during Ramadan. But most Tunisians are struggling to make ends meet. The price of vegetable oils in February rose 24.6% year on year, chicken increased by 25.3%, and milk by 16.1%.

On Thursday, Tunisia’s Ministry of Commerce announced maximum sale prices and margins for basic goods such as eggs, fruits, and chicken until the end of Ramadan.

In Morocco, annual inflation accelerated to 8.9% in January 2023, with food inflation reaching 16.8%. Besides global commodities such as wheat, Moroccan inflation is also being driven by transport costs and fragmented distribution channels.

Since it eliminated fuel subsidies in 2015, Moroccan domestic fuel prices have fluctuated according to global prices. Because it imports over 90% of the hydrocarbons it consumes, Morocco is especially vulnerable to energy and transport price surges.

Rachid Aourraz, an economist and a non-resident scholar at the Middle East Institute in Washington, told Al-Monitor, “If inflation continues to climb over the coming months, it is highly probable that we will see street protests.” 

North African governments have long been aware of how sudden food price increases can trigger popular discontent. Faced with escalating high prices, authorities in the region have been clamping down on speculation by traders.

In Tunisia, the government passed a law in March 2022 that includes jail terms of up to 30 years for people or groups accused of food profiteering. Tunisian media regularly shows security forces seizing food items from warehouses and detaining alleged speculators.

Algeria, too, has jailed traders accused of buying subsidized goods such as semolina and cooking oils to sell in neighboring Tunisia at a profit.

But speculation is the easiest aspect of inflation to deal with, rather than its biggest driver. “You cannot eliminate speculation with a law,” says Mourad Ouchichi. “Governments like to showcase speculation as the main cause for inflation mostly to show they are working to fight inflation.” 

Over the medium term, increasing domestic food production will increase availability and reduce food prices. But during Ramadan and in the coming months at least, citizens in Morocco, Algeria, and Tunisia will continue to face hard choices at the grocery store.