Country: Yemen Source: Famine Early Warning System Network Please refer to the attached file. Key Messages In areas controlled by the Sana’a-Based authorities (SBA), Emergency (IPC Phase 4) outcomes are expected to persist through September in Al-Hudaydah, Hajjah, and Ta’izz governates, with Crisis (IPC Phase 3) outcomes widespread elsewhere. The slow recovery of operational capabilities at Red Sea ports and a worsening business environment continue to severely constrain income-generating activities. Additionally, in the rural lowlands, high fodder costs and above-average temperatures, along with declining household purchasing power, are expected to limit the seasonal profits of pastoral households during Eid al-Adha, when demand for livestock increases. Intense competition for scarce opportunities, further intensified by the presence of large numbers of internally displaced persons (IDPs), is expected to result in extremely limited financial access to food, widespread food consumption gaps, and the persistent use of negative coping strategies. Crisis (IPC Phase 3) outcomes are expected to persist in areas controlled by the internationally recognized government (IRG) through September, with pockets of Emergency (IPC Phase 4), particularly among households with extremely limited sources of food and income. Prolonged economic disruptions, significantly below-average labor demand, and severely limited livelihood opportunities are resulting in income levels insufficient to meet food consumption needs. Demand for agricultural labor is expected to rise moderately throughout May due to the fruit harvesting season, especially for mangoes. However, from June to September, which is typically a dry period across most IRG areas, demand for all types of labor is expected to decline. For the poorest households, food consumption gaps or the use of unsustainable coping strategies to mitigate those gaps remain likely through September. Price fluctuations for basic food, and particularly non-food items, continued in May as demand increased with the approach of Eid al-Adha. Data for SBA-controlled areas are limited, but indicate reduced imports and higher shipping costs are driving increased prices for select food and non-food commodities, including cooking oil, which increased 13 percent between March and April. In IRG-controlled areas, the Ministry of Trade and Industry (MTI) in Aden is regulating market prices through the enforcement of an administrative circular, mandating set prices for essential commodities. Additionally, the Supreme Authority for Medicines and Medical Supplies in Aden has issued a requirement that pharmaceutical companies print the official retail price on medicine packaging, aiming to regulate the market and curb price manipulation following sustained price increases since January 2026. Nonetheless, higher shipping costs and more limited enforcement of price controls are leading to price increases of 10-22 percent for cooking oil, diesel, and gasoline, and for cooking gas in reference markets outside of Aden. Extreme heat – with temperatures expected to reach as high as 42 degrees Celsius in coastal and desert areas – is placing additional burdens on poor households and limiting their income-earning capacity. Countrywide, the extreme heat has adversely affected the development of vegetable crops and livestock production: households have limited shelter to protect their animals from the heat, resulting in diminished productivity and reduced profits. In IRG-controlled areas, power outages have worsened in recent months, with outages lasting over 18 hours in Aden in May, further driving down casual labor demand as operational hours and profits for small businesses dwindle. Expenditures on energy and health typically begin to increase at this time of year; however, the intense heat has driven these expenditures to atypical levels. Demand for public water is soaring, and there are reports of increased malaria and Dengue fever incidence. Given extremely low income levels and strained budgets, reports of poor households turning to self-treatment with natural products and food items are increasing. The IRG continues to operate with a fiscal deficit, as revenues remain stagnant and local authorities continue to withhold the transfer of local revenues to the government’s account at the Central Bank of Yemen in Aden (CBY-Aden). The Ministry of Finance announced a 20 percent duty on wheat flour imports from May 1 to October 31 (renewable) in an effort to protect the local milling industry. While likely increasing government revenues, the new duty is unlikely to meaningfully decrease the deficit. Additional policy plans were also introduced in May, which are expected to have mixed effects on government revenues; however, detailed information on implementation is not yet available. A significant amount of currency, estimated at trillions of YER, remains outside the formal banking system, leading to local currency shortages. Many small companies and private-sector employers have had to withhold or delay salary payments due to liquidity issues. However, the severity of the shortage eased slightly in May as the approximately 3 billion YER injected to the Yemeni economy by CBY-Aden in March began to circulate more widely. As a result, the limit for hard currency exchange transactions increased from 100 SAR to 1,000 SAR, providing some relief to households, particularly as the Eid al-Adha holidays approach (a time when remittances from abroad traditionally increase).