Highlights on food security:

Headline inflation has declined significantly since 2021. Inflation fell from a peak of about 170 percent in late 2019 to average around -3.2 percent during 2022 (Figure 1.8) following a successful exchange rate unification in 2021 and reforms supported by a series of IMF programs and stands in stark contrast to neighboring countries where inflation increased (Figure 1.9).

Price pressures briefly re-emerged at the start of 2023, reflecting the lagged effect of higher global food prices in 2022 and exchange rate depreciation underpinned by periodic bouts of monetary financing of the deficit (as was the case in mid-2022). However, inflation started decelerating around mid-year, averaging 3.3 percent in the first 9 months of 2023 (Figure 1.8). Food comprises nearly 71 percent of the CPI index and is highly correlated with headline inflation. With global prices of staples - sorghum, maize and wheat easing in recent months – these fell 29 percent, 28 percent, and 34 percent (yoy) in September 2023 – local price pressures may moderate further in coming months.

Lower prices may provide some respite to an already stressed and food insecure population. About 7.7 million people are severely food insecure (about two-thirds of the population), which is partly a legacy of long years of conflict, loss of productive assets amid several years of flooding and displacement, and limited income-generating opportunities. Some 2.2 million people are internally displaced (55 percent of whom are women and girls) and nearly 300,000 people have crossed the border to escape conflict in Sudan since April 2023, the vast majority of which are South Sudanese. This has also contributed to a spike in food prices in northern states that engage in formal and informal trade with Sudan, further exacerbating the humanitarian situation there.