International Journal of Accounting Research

Abstract

Inflation in Somalia Causes and Consequences

Abdirahman Jimale Adan*, Abdiaziz Ahmed Ibrahim and Jamaal Mohamud Hussein

The first purpose of this research is to examine factors that cause inflation in Somalia in 2022. The causes include droughts in the country, COVID-19 and Russian Ukraine war. The second purpose is to analyze the effect of inflation on households’ standard of living. In order to assess the causes and consequences of inflation on Somali economy, the researcher adopted an analytical descriptive approach. To collect primary data questionnaire is conducted with different groups of people (e.g. merchants, household, and bankers). The research reveals that droughts in the country, COVID-19 and Russian Ukraine war contributed to the increase of inflation in Somalia, and also concluded that inflation has a negative impact on many aspects of Somali economy the most important of which is its impact on purchasing power, commodity price and economic condition of the households and hampering the business activity of Somali people by creating uncertainty among savers and investors. The researcher recommended that the government should work hardly to prevent stop the continuous rise of rates of inflation in Somalia by introducing economic policies that aim at increasing the productivity, inducing public saving, as well as providing the necessary basic needs to those affected by droughts.

Published Date: 2023-03-14; Received Date: 2023-01-20