In-depth: Strained to the Limit: Rising transport costs, inflation leave Addis Abeba’s low-income earners on edge

By Yishak Endris @Yishak_Endris

Addis Abeba – Addis Standard met with Wondwosen Shiferaw, a resident of Koye Feche, a sub-city within the Sheger City administrative area, as he stood in a lengthy line of individuals awaiting public transport to reach their workplaces.

Each workday, Wondwosen commutes from Koye Feche, located approximately 18 kilometers from the capital, into the bustling center of Addis Abaea to reach his job.

In addition to the long commute and extended waiting times for transportation, he is burdened by the rising cost of daily travel. The recent fuel price increase of up to eight birr per liter, coupled with the subsequent hike in public transportation fees, has made life increasingly challenging for Wondwosen and his family.

“I used to barely get by before,” Wendwosen, a father of two, told Addis Standard. “Now, I am truly struggling to make ends meet.”

Wendwosen explained that he must stretch his monthly salary to cover household expenses, school fees for his children, transportation costs, and more. Despite his efforts, he noted that his income is still insufficient.

“My wife and I often find ourselves borrowing from friends just to get by, juggling one debt after another,” he said, expressing his frustration.

Wendwosen further emphasized that the rising cost of living, particularly the escalating transportation expenses, has placed considerable strain on his household budget, leaving him and his family increasingly vulnerable.

“My wife and I have sacrificed our own meals frequently to ensure our children are well-fed,” he noted. “Often, we find ourselves skipping lunch or dinner.”

Over the past three years, Ethiopia has faced substantial increases in fuel prices, which the government attributes to fluctuations in global oil markets and fluctuations in the domestic foreign exchange rate.

My wife and I have sacrificed our own meals frequently to ensure our children are well-fed.”

Wondwosen Shiferaw, a resident of Koye Feche

In September 2024, the government implemented another substantial fuel price hike, increasing retail prices by up to eight birr per liter.

Consequently, the price of gasoline has increased to 91 birr per liter, while diesel prices have risen to 90 birr per liter. This latest adjustment represents a 10.3% increase for gasoline and a 7.8% increase for diesel.

Furthermore, the price of kerosene has also experienced a notable 7.8% increase, reaching 90.28 birr per liter.

In response to the recent fuel price increase, the Addis Abeba Transport Bureau has revised service fares for minibus taxis, midibuses, and city buses operating within the capital.

Under the new tariff structure, the minimum fare for short-distance taxi journeys has increased from 4.50 birr to 10 birr. Simultaneously, the fare for the longest distance has risen by 13.5 birr, reaching a total of 65 birr.

For minibuses, the price has increased by up to 10 birr, while fees for city buses have increased by an average of five birr.

Such increases in fuel prices and public transportation fees have affected not only Wondwosen and his family but also a significant portion of society, particularly those with low and fixed incomes.

A resident of Tulu Dimtu, who requested anonymity, expressed similar concerns to Addis Standard.

He highlighted that the recent increase in transportation fares is likely to severely curtail his mobility within the neighborhood and throughout the city.

“Working in a private organization, I earn a monthly salary of 7,400 birr,” he explained. “However, my expenses, including rent, utilities, transportation, and other costs, consistently exceed my income.”

The resident also noted that none of his friends are in a better situation. “We are constantly in need of assistance, often reliant on the support of others.”

He further explained that, due to the recent increase in transportation fares and daily expenses, he is now carefully budgeting his income to ensure it covers all essential needs. He described this situation as “a burden” that he is forced to manage with caution.

“From Tulu Dimtu to my workplace, I take at least two taxis, and the constant increase in transportation fares has made my life even more challenging,” he said. “The situation has become unbearable, and I feel as though I am losing everything; the weight of this struggle is overwhelming.”

Enduring the burden

In addition to the recent tariff increases, residents of the capital have expressed concerns that many transportation providers are overcharging passengers, surpassing the newly adjusted fares.

According to individuals interviewed by Addis Standard, this practice has significantly disrupted their daily lives and placed an additional burden on them amidst the rising cost of living.

A resident of Addis Abeba, employed by a private company in Lideta Sub-city with a monthly salary of 10,000 birr, shared her frustration with Addis Standard.

She explained that while her income was once sufficient, she now finds it increasingly difficult to make ends meet.

“I reside with my mother, and I am her sole child. I am responsible for providing for our household needs,” she stated. “However, I am currently facing significant financial challenges.”

The resident further explains that the recent increase in transportation fares is “unreasonable and untimely.”

“I need to travel from Kara to Lideta by taxi to reach my job, but the transportation fare has risen significantly,” she explained. “Especially during rush hours, when the roads are often congested, taxi drivers increase their fares, forcing me to pay much more than the official rate.”

Using her daily commute as an example, the resident highlighted how the rising transportation costs are impacting the working class.

“For a trip from Kara to Lideta, one must first pay 30 birr to reach Ayer Tena, then another 15 birr for the remaining part of the journey,” she explained. “This means that for a round trip, a person spends 45 birr each way, totaling 90 birr for transportation.”

She further added that considering the substantial monthly expenditure on transportation, coupled with other expenses, commuters are left with limited financial resources.

Recently, the Addis Abeba Transport Bureau issued a statement indicating that “some public transportation drivers are engaging in the illegal practice of overcharging passengers” and warned of impending stricter enforcement measures against these drivers.

A taxi driver interviewed by Addis Standard described the recent increase in taxi fares, which rose by as much as 10 birr, as “unusual.” He pointed out that in the past, when fuel prices went up, taxi fares would only increase by 2 or 3 birr. “However, nothing like this has ever happened before,” the taxi driver emphasized. “Commuters are struggling to cope with this.”

Living on the brink

During a press briefing in September 2024, Ahmed Tussa, an advisor to the Minister of Trade and Regional Integration, explained that, due to the current foreign exchange rate, the cost of importing and transporting fuel into the Ethiopian market could drive prices up to as high as 120 birr per liter.

I frequently forego meals to save money.”

A resident of Arada sub-city

“To mitigate the impact, the government plans to absorb the majority of the cost increase, particularly for diesel and kerosene, by covering 80% of the price difference,” he stated. “The remaining 20% will be passed on to consumers as part of the government’s strategy.”

However, a macroeconomist who spoke to Addis Standard immediately after the recent fuel price hikes warned that these increases could exacerbate the already high inflation rate.

“Historically, increases in fuel prices have been closely linked to inflation,” he noted. “Recent price adjustments have also had an inflationary effect.”

The macroeconomist further explained that fuel is a key item that significantly impacts the non-food component of the Consumer Price Index (CPI), a vital economic indicator published monthly.

“The ripple effect on other commodities could further intensify the already severe cost of living,” he cautioned.

Fixed and low-income earners have long been acquainted with rising prices, as the average headline inflation rate has grown annually by 15% over the past decade.

In recent months, a substantial portion of the population has continued to face elevated prices, particularly following the implementation of macroeconomic reforms in late July 2024.

Following the recent implementation of macroeconomic reforms, the country—especially the capital, Addis Abeba—has seen a notable increase in the prices of various consumer goods, spurring authorities to crack down on businesses accused of price gouging and hoarding.

A survey conducted by Addis Standard across various markets in Addis Abeba revealed a marked increase in the prices of certain products, particularly imported goods and essential domestic items such as oil, sugar, and onions.

Despite these developments, official data indicates a decrease in headline inflation from 28% to 17.2% last month.

However, this offers little relief for many fixed and low-income earners who are struggling to make ends meet amid the rising cost of living.

“There are many days when I consume only one meal,” stated Takale Getu (name changed), a resident of the Arada sub-city, in an interview with Addis Standard.

He stressed the need for the government to take all necessary measures to address the escalating transportation fares and the general rise in prices.

“Both my wife and I are employed, but when we receive our monthly salary, we struggle to cover our daily expenses and are only able to make ends meet from month to month,” explained the father of two. “I can scarcely afford to eat once a day; our life has become progressively more challenging.”

To illustrate the challenges he faces, the resident described his daily routine.

“I frequently forego meals to save money. After enduring long bus queues and a tiring workday, I and my wife share whatever limited food we have with our children before retiring for the night,” he explained. “This cycle continues day after day.” AS