Afghanistan: Monthly Market Report Issue 75: August 2026

Country: Afghanistan Source: World Food Programme Please refer to the attached file. KEY HIGHLIGHTS Major Economic Developments Economic Growth & Household Welfare: Afghanistan’s economy continues to show modest growth, supported by domestic demand and the return of large numbers of Afghans, with agriculture, industry, and services contributing to economic activity. However, the pace of recovery remains insufficient to keep up with population growth, limiting improvements in per capita income and household purchasing power. Limited income opportunities, widespread poverty and subsistence insecurity, and gaps in access to basic services continue to constrain household resilience and reduce the ability to absorb food-price, employment, and other market shocks. Trade & External Vulnerability: Domestic markets in Afghanistan are highly vulnerable to regional trade disruptions and global price fluctuations, given the country's reliance on imports for major food and non-food items. Rising global commodity prices and geopolitical uncertainty, alongside continued disruptions to regional trade routes and reliance on alternative corridors, remain key risks to price stability. These cost pressures disproportionately affect low-income households, which spend a large share of their income on essential goods and have limited capacity to absorb price shocks. Exchange Rate: The Afghani appreciated modestly against the US dollar in August, with the monthly average reaching AFN 65.4/USD. The currency was 4.5 percent stronger than a year earlier and 12 percent stronger than its three-year average, supporting relative exchange-rate stability, providing some protection against imported inflation; however, the benefit was partly offset by higher transportation costs, market instability and elevated international commodity prices. Inflation Rate: Inflationary pressures remained elevated, with July 2026 headline inflation at 7.5 percent year-on-year and food inflation at 7.0 percent. Non-food inflation remained higher at 7.9 percent, driven by persistent increases in health, housing and transportation costs. Continued import and transport cost pressures, alongside elevated housing and healthcare expenses, point to sustained pressure on household living costs. Key Market Pressures: Diesel prices increased 3.3 percent in August to AFN 76.7 per litre, standing 15 percent above last year. Fertilizer prices remained substantially above last year, with Urea 35 percent higher and DAP 15 percent higher, maintaining pressure on agricultural production costs.
2026-09-16 00:47:45