Inflation is starting to creep up in Jordan, but this is not necessarily being captured in the official numbers. Naseem Tarawnah takes a look into the nation's fruit basket where inflation has hit hardest.
If you were to draw the path of official inflation figures in Jordan over the past three years, your picture would look more like a simple molehill than a burdensome mountain. However, if you've gone anywhere near the produce section of your local supermarket lately, the reality check you might get will make you want to think twice about those official numbers.
Last month, Dr. Mahmoud Al Najdawi, spokesperson for the Ministry of Agriculture, told local media that prices of foodstuffs would "never go back to the way they were," affirming that "we must get used to the new prices." While this statement may not come as a galloping shock to most, it does provoke a type of nostalgia for the simplicity of only several years past, when prices were lower, inflation was contained, and it was easier to attain a decent standard of living in Jordan.
Official statistics place the change in the consumer price index (CPI) at 6.3% for 2006, a significant leap from 3.5% in 2005. Coupled with only small increases in real incomes, the average Jordanian's monthly wage now buys him or her less than what it did in 2001, when inflation was only 1.8%. In 2001, the CPI was an average of 101 for fruits and 102 for vegetables, rising to an average of 118 and 169, respectively, in February 2007. Meats and poultry made an even more staggering leap from 98 to 141 in the same period. Combined, these components represent 40% of the overall consumer basket for the average Jordanian.
In the coming months, inflation is expected to soar past the official figure of 6.5%. In April 2007, the price of tomatoes hovered around 70 piasters per kilo, as increased exports of vegetables have lead to a decrease in the supply of local fresh produce in the Jordanian market. Other staples, such as cucumbers and potatoes, have seen similar increases, with prices rising from as much as 15 to 60% in a single week.
In a meeting with representatives from the Consumer Protection Society and various agricultural and export unions, Minister of Agriculture Mustafa Kornfoulah stated that exports of agricultural produce were "neither harmful nor a matter open for discussion." Rising prices of fruits and vegetables are only partially responsible for the general rise in prices; spiraling energy prices over the past year have played a major role in generating some of the highest prices in Jordan in 11 years, and a planned subsidy cuts on such things as fuels, only threaten a tighter squeeze.
In December 2006, a public opinion poll conducted by Jordan Center for Strategic Studies found that an overwhelming 71% of Jordanians had not seen an improvement in their standards of living. Jordan in 2007 may also have to grapple with "imported inflation," the result of declining terms of trade, due in part to a weakening U.S. dollar and, by extension, the Jordanian dinar.
As it continues to creep upwards, inflation will continue to be a main concern for the economy in 2007; however, this is not necessarily being captured in the official numbers. The simple explanation is that the CPI basket does not seem to capture the price changes in Jordan today, nor does it include the range of goods and services in demand.
According to a report prepared by the Jordan Center for Public Policy Research and Dialogue, the Department of Statistics also needs to firm up its price data by excluding volatile elements such as foodstuffs and energy, yielding a more accurate measurement of inflation.
The government is aware of the problem and is starting to acknowledge it. Whether they will try to do something about it remains to be seen. For now, inflation will continue to rise as the fruit baskets of the average Jordan grow smaller.
© Jordan Business 2007
