Mukalla, Yemen – When Abdullah Salem raised his fare by 100 Yemeni riyals ($0.06) on a routine afternoon trip from the eastern outskirts of Yemen’s port city of Mukalla to the city centre, passengers pushed back immediately. “They shouted at me,” the 55-year-old driver told Al Jazeera as he prepared for another trip. “I told them it’s not my decision; it’s the government who have hiked fuel prices.”

The Yemen Petroleum Company (YPC), controlled by the internationally recognised government, has announced a new round of fuel price hikes in areas under its administration, a move that analysts say could accelerate inflation and deepen economic hardship across the country.

In a statement posted on social media on April 16, filled with praise for the government’s efforts to stabilise prices and ensure the flow of fuel, the company said it had raised the price of petrol and diesel to 1,475 Yemeni riyals ($0.98) per litre, up from 1,190 ($0.79), representing a sharp 24 percent increase.

It attributed the increase to regional tensions, including the Iran war, disruptions to shipping through the Strait of Hormuz, and a surge in transport and insurance costs for shipments to Yemen.

In the same post, the YPC sought to ease public concern, saying the increase would be temporary and that prices would return to previous levels once regional hostilities subsided. “The company regrets having to raise prices and emphasises that the increase is temporary, contingent on the resolution of the Gulf crisis and a return to normal conditions,” it said.

The company has since defended the fuel hikes, even as global oil prices have occasionally decreased amid hope of a possible deal between the United States and Iran. The prices would still have to rise, the company said, because it imports already-refined fuel with prices that are tied to global product markets rather than the cost of crude oil. It added that fuel is priced in local currency upon arrival in Yemen, based on the US dollar exchange rate at the time of purchase, in addition to transport and storage costs.

Struggle to earn enough

But for millions of Yemenis like Abdullah Salem, who work long hours and still struggle to make ends meet, the latest fuel hikes are another blow.

Abdullah said that he spends his mornings transporting students from different parts of Mukalla to the city’s university, before driving routes for the general public in the afternoon. Even with the long hours, he barely earns enough to cover fuel costs and support his extended family, including his brother’s household, with whom he shares a home.

“We don’t save anything. Everything is expensive, food and other commodities,” he said.

To cope with the rising costs, Abdullah has increased monthly fares for students by 3,000 riyals ($2) and raised afternoon trip fares by 100 riyals ($0.06). While students have largely accepted the increase, many passengers on his afternoon routes have stopped using his service, opting instead to hitchhike.

“We want the government to provide subsidised fuel,” Abdullah said. “People are very poor, and these price hikes will only push food prices higher.”

Despite no immediate reports of increases in food prices, economists say the latest fuel hikes are likely to push up costs across several sectors, including food. They also warn that the government could approve another round of fuel price increases if global oil prices continue to rise.

Mustafa Nasr, head of the Studies and Economic Media Center, said Yemen imports fuel from international markets, while some fuel produced from local oilfields is also sold on the domestic market.

“Economic activity is likely to be affected across the board, whether through rising prices of goods in the markets or potential shortages of petroleum products, with repercussions across multiple sectors,” Nasr told Al Jazeera. “Fragile economies like Yemen’s are particularly vulnerable to such external shocks, meaning the impact is likely to be felt more deeply and across all levels of society.”

Exhausted savings

Shortly after the latest fuel hikes took effect, residents across government-controlled areas, including Aden and Mukalla, reported increases in transportation fares.

Government officials appeared on state media meeting with representatives of transport unions, in what appeared to be a message aimed at reassuring the public that authorities would rein in unjustified fare increases. Unlike previous rounds of fuel hikes that triggered violent protests, there has been little reported unrest in government-controlled areas so far.

Um Fatemia, a university student who travels nearly an hour from home to campus in Mukalla, said her family has exhausted its savings and that her mother has even sold jewellery to help pay for her education.

“I live in a difficult situation, and no one has helped me,” she told Al Jazeera, asking to be identified by her nickname.

She often falls behind on bus fares, sometimes settling the previous month’s fees halfway through the following month.

Although the latest fuel price hikes took effect in the second half of April, the bus driver told her and other students they would have to pay 49,000 Yemeni riyals ($32.60) by the end of the month, up from less than 45,000 Yemeni riyals ($30) the previous month.

“What surprised me most is that buses running on gas, whose price was not affected by the latest hike, also raised their fares, claiming they spend long hours queuing at gas stations,” she said. “My father is a teacher, and his salary is often delayed. Even when he is paid, it barely covers our household expenses, forcing my mother to sell her jewellery to help cover bus fares and other costs. My father is responsible for supporting the entire family.”