The food security situation for poor urban households is currently satisfactory, as the cost of the total expenditure basket is below the risk threshold.  However, reports suggest that shortages of staple foods are developing in local markets and may trigger price increases.  Additionally, household expenditures typically rise during the Eid ul-Adha period, and thus financial strain is anticipated for poor households during the month of December.

The purchasing power of poor households has decreased significantly in recent years.  Around 10 to 15 percent (70,000 to 105,000 persons) of the population in the city of Djibouti live in extreme poverty, earning less than 200 Djibouti Francs or one dollar a day.  Many of these households are located in Arhiba, Balbala and PK 12.  The main sources of income for these households are casual labor, petty trade, low paid employment and pensions.  Casual labor is limited and many households may go six months without employment.  In addition, the daily wage rate for temporary employment has been fixed for the last ten years and has never been adjusted to reflect the changes in the cost of living.  Finally, the competition for scarce labor opportunities is made even more intense by the large refugee work force from neighboring countries that actively competes in the labor market at cheaper rates.

Prices for almost all commodities have increased due to speculations and the control of the market by a small oligopoly of companies.  Recent increases in international oil prices have affected the transport costs, which have been passed on to the consumer.  Since Djibouti imports the majority of the staple foods consumed in the country, it is particularly vulnerable to increases in transport costs. 

Rains continued during November along the coastal belt, increasing the likelihood of a good 2007 heys/dada season.  Most pastoralists are currently concentrated in their normal heys/dada grazing areas around the coastal belt.  The food security situation of most pastoral livelihood zones is currently satisfactory.  The onset and performance of the approaching diraa/sougoum season is the principal factor influencing the food security of highly livestock dependent households in inland areas.  The chronically food insecure population (27,000 people) will require food aid assistance throughout the year.  The WFP emergency operation is scheduled to end at the end of December 2006.