Record inflation adds to Tunisia’s economic woes

November 19, 2017
Under pressure. A shopkeeper counts money in Tunis. (Reuters)

Tunis - Inflation in Tunisia jumped to its highest level in almost four decades in October, adding to a financial crisis that has seen un­employment increase and the economy stagnate.
Economic experts struggled to explain why an economy with low production and high joblessness could yield such high inflation. It has put a strain on Tunisians who have seen their standard of living decrease since the 2011 uprising that overthrew former President Zine el- Abidine Ben Ali.
“It is difficult to convince these people that freedom and democracy cannot be gauged by the prices of fruits and vegetables in the market,” wrote economist Marouen Achouri in an opinion piece in Business News. “It is also difficult to ignore the anguish and the anger of these people when they do the grocery shopping.”
“Prices are flaring up for no ap­parent reason and it is difficult for many people to put food on their families’ tables without feeling bitter” at the increase in prices, he added.
During a parliament debate over next year’s draft budget, MP Maher Madhioub cast doubt on civil au­thorities’ ability to address the issue and called on the army to control prices.
“I say this with all respect… but we have reached a red line when a citizen is not able to buy goods of basic necessity,” Madhioub said at the meeting, which was attended by Tunisian Prime Minister Youssef Chahed and 28 ministers. “I call on the National Security Council to tackle the issue of the prices and or­der the national army to control the market to bring the consumer prices to their normal levels.”
Madhioub is a member of the Is­lamist Ennahda party, which con­trolled key ministries during most of post-2011 period. Until September 6, the Trade Ministry was run by Zied Ladhari, Ennahda’s secretary-gen­eral.
The National Security Council, led by President Beji Caid Essebsi, brings top army officers and security chiefs together with ministers.
Using the council to combat social or economic issues is uncommon but not unprecedented. On May 10, the council deployed the military to safeguard oil, gas and phosphate fa­cilities in southern Tunisia after pro­tests disrupted production.
Experts, however, predicted Tu­nisia’s economic crisis would con­tinue.
“The consumer price index rose to 1.1% in October 2017,” said Mohamed Zarrouk, an economist and former chairman of the country’s Con­sumer Defence Association. “All the economic figures confirm that this trend will persist mainly because of high taxation pressures in 2018, the imported inflation that amplifies the local inflation on the back of the decline of the value of the dinar and the increase of the prices of goods projected by the draft budget for next year.”
“The country would have an infla­tion rate hovering around 15% in the next months on a year-to-year ba­sis,” Zarrouk warned. “The situation will turn perilous and grave because investment generally grinds to zero in economies where inflation is soar­ing.”
The government-run National In­stitute of Statistics said the monthly inflation rise was due to more rap­idly increasing prices for food and non-alcoholic beverages.
Inflation in Tunisia averaged 5.2% in the years leading up to 2017, with a record low of -1.4% in 1970 and a record high 16.7% in July 1982, when the country went through its worst economic crisis
Chahed, who has been struggling to reverse years of economic mis­management, asked the country’s top supermarket chains to trim prices on fruit, vegetables, meat and eggs. It is unclear whether he will succeed in lowering prices.
“No one seems to be able to van­quish the inflation,” wrote Soufien Lassoued in an opinion piece in Al Achourouk. “Tunisians are left alone paying the prices of the de­feat in the war against higher prices. Successive governments promised to change the situation and they failed.”
Asef Ben Ammar, an economic an­alyst, attributed the crisis to previ­ous administrations’ incompetence and noted that high unemployment rates had spurred many young peo­ple to leave the country.
“Economic wisdom has always (indicated) that when inflation rises unemployment falls. This negative economic trade-off is at odds with the economic situation in Tunisia because of the blunders… of succes­sive governments,” he said.