Addis Abeba — In the wake of the Ethiopian government's implementation of sweeping macroeconomic reforms, the country, particularly the capital Addis Abeba, has seen a notable rise in prices for a range of consumer goods, prompting a crackdown on businesses accused of price hikes and hoarding.
The reforms, announced on July 28, 2024, have transitioned the country from a fixed foreign currency exchange rate system to a market-based exchange rate. As a result, the value of the Ethiopian birr has plummeted, with the US dollar now exceeding 100 birr, up from the previous rate of about 57 birr.
This dramatic shift in currency valuation has had a profound impact on the cost of living. According to a survey conducted by Addis Standard at various markets in Addis Abeba, it was found that prices for some products, particularly imported goods and essential domestic items like oil, sugar, and onions, have risen significantly.
A trader at the city's major market, Merkato, who wished to remain anonymous, reported that a five-liter container of cooking oil that previously cost 900 birr is being sold for as much as 1,200 birr. Similarly, sugar, which used to be priced at 100 birr per kilogram, has now risen to 116 birr.
Another resident at the Shola market of Addis Abeba, who also requested anonymity, reported that the price of cooking oil, which used to be 1,000 birr, has now increased to 1,500 birr.
Amidst the price surge, the government has moved to crack down on businesses accused of exploiting the situation.
The Addis Abeba Trade Bureau, reported that over the past week, more than 2000 businesses have been shut down, and 87 traders have been brought to justice for imposing unwarranted price hikes and hoarding goods under the guise of foreign currency management regulations.
On Thursday, officials of the Gulele Sub-city administration in the capital Addis Ababa said they have "distributed 800,000 liters of confiscated edible oil" to 10 consumer cooperatives in the city. The edible oil was "confiscated from traders attempting to hoard it and create an artificial shortage," and was released to the cooperatives to "ensure that essential goods remain accessible and affordable to consumers, particularly in light of ongoing economic challenges."
According to Andualem Kibret, the head of the Gulele Sub-city commercial office, the edible oil was "being secretly stored by the traders as part of a scheme to manipulate the market."
The Ministry of Trade and Regional Integration, led by Minister Kassahun Gofe, had announced the procurement of 14 million liters of cooking oil to be distributed nationwide in an effort to stabilize the market.
Minister Kassahun previously cautioned that goods which have seen unjustified price increases, including metal, cement, sheet metal, other construction materials, and basic goods, should maintain their pre-reform prices.
Despite these actions by the government, residents continue to experience a sharp increase in prices. A resident of the Bulbula area, who wished to remain anonymous, expressed significant concern among the public.
"In the past, when the price of fuel rose or the country faced an economic challenge, merchants would raise prices. The current situation has also created notable anxiety," he said.
He further explained, "Now, when we go to the market, instead of finding cooking oil on display as before, they only bring it out from storage if you specifically ask for it. The products they display are merely for show, and they are holding onto their stock, expecting prices to rise further."
Several consumers who spoke to Addis standard during the survey expressed their profound concerns over potential future price hikes as the purchasing power of the local currency continues to fall.
"I currently earn 1,800 birr per month. I have a child and work in domestic services. The cost of living has already been unbearable, and I am struggling to make ends meet," lamented one Addis Abeba resident.
In the Bulbula area, Addis Standard observed that there has been a noticeable price increase in products like cooking oil and sugar. Omar-brand cooking oil is now being sold for 1,200 birr, reflecting a 200 birr increase from the previous price. Similarly, sugar, which was previously sold for 120 birr per kilogram, is now priced at 130 birr, with a 10 birr increase.
Similarly, a resident of the Qebena area, who wished to remain anonymous, also noted the absence of goods from the market. He reported that "In the last week, merchants who used to set up tents and sell goods around the Qebena Medhanealem area on Saturdays and Sundays have not brought their products. When we asked them why, they said it was due to the rising dollar."
A resident who spoke with Addis Standard mentioned that the government should have raised awareness among the public before implementing the policy. "The reform has various positive aspects, but the lack of awareness among the people about the increase in the dollar rate is leading to unnecessary price hikes on goods, which is making life harder for the population," the resident explained. They also urged the government to strengthen regulatory measures and continue efforts to stabilize the market.
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Another resident, highlighting the intrinsic dynamics of trade, stated, "There is a chain reaction in business. If the price of oil increases, the onion seller will hike the price of onions because they can't afford to buy the oil. This cycle of debt falls entirely on the people," they explained, adding that the government needs to find a sustainable solution to the high cost of living.
Additionally, white teff, which was previously sold for 140 birr per kilogram, is now priced at 145 birr, marking a 5 birr increase. The merchants interviewed by Addis Standard attributed these price increases to the additional costs they have incurred in sourcing these products.
In contrast, the vegetable market in the surveyed areas has not shown much significant change, except for a noticeable price increase in onions. Merchants selling vegetables around the Giorgis Market confirmed that "this week, there's been an increase in onion prices. Previously, good quality onions were sold for 50 or 55 birr, but now they are going for 90 to 100 birr." However, they emphasized that this price increase is not linked to the dollar exchange rate.
