1

THE EFFECTS OF RAMADAN ON PRICES : A COMPARISON BETWEEN3 COUNTRIES (MAROCCO, SENEGAL, TUNISIA)

Modou Ndour FAYE Béchir MAGHRABI,Adnen LAOUSSED Amal MANSOURI,

Dominique LADIRAY 1

Modou Ndour FAYE, Head of the Quarterly Accounts and Analytical Studies Office, NationalAgency for Statistic and Demography, modoundourfaye@hotmail.com;

Adnen LAOUSSED, General Director of Statistics Tunisia, adnen.laoussed@gmail.com;

Béchir MAGHRABI, Director of the Context, Statistics Tunisia, bechir.mghrabi@gmail.com;

Amal MANSOURI, Head of Socio-Economic Information Division, National Institute of Conjunc-ture Analysis, amal.mnsr@gmail.com;

Dominique LADIRAY, former head of the Short Term Statistics Department, National Institute ofStatistics and Economic Studies , France, dladiray@yahoo.fr ;

LAST REVISED : SEPTEMBER 2019

1. All the views expressed in this paper belong to the authors and do not represent those of the National Agency for Statisticsand Demography, Statistics Tunisia, National Institute of Business Analysis and the National Institute of Statistics and EconomicStudies.

2

THE EFFECTS OF RAMADAN ON PRICES : A COMPARISON BETWEEN3 COUNTRIES (MAROCCO, SENEGAL, TUNISIA)

Abstract

Ramadan is characterized by an increase in household consumption expenditurein many countries, which is accompanied by more marked price changes, espe-cially those of foodstuffs. This paper aims to study and compare the effects ofRamadan on prices in three Muslim-dominated countries : Morocco, Senegal andTunisia. The estimation methodology is based on the RegARima models takinginto account the specific regressors to the national calendars of the 3 countries.The common estimation period is 10 years. The estimation results on the basicindices of consumer prices show that the effects of Ramadan on food prices are,on the whole, significant at the level of the three countries, but tend to undergounstable changes during the study period.

Keywords : Seasonal adjustment, Calendar effects.JEL Classifications : C22

3

1 Introduction

Ramadan, the ninth month of the Hijri calendar, corresponds to the period of fas-ting among Muslims and is characterized by a change in household consumptionhabits compared to other months of the year. Most often the breaking of the fast,which takes place at sunset, is done in family, around traditional dishes and delica-cies. Ramadan is also characterized by a rise in specific purchases of clothing andsome household equipment, in view of the holiday of Aid el-Fitr which reflects theend of Ramadan.

The increase in household spending observed during the month of Ramadan isaccompanied by significant changes in consumer prices, especially those of foodproducts. Stylized facts indicate that consumer prices are significantly higher du-ring Ramadan in different Muslim countries. Unfortunately, these measures havenever been compared. The main objective of the article is to conduct a compara-tive analysis of the effects of the month of Ramadan on consumer prices in threeMuslim countries (Morocco, Senegal, Tunisia). The first step is to homogenise thenomenclatures of the price indexes , use a common method of estimation takinginto account the specificities of the calendar of each country and study the conver-gences and divergences in terms of effects between the 3 countries.

The paper is divided into four sections. The first will present succinctly studies thathave focused on the effects of the Hijri calendar. The second section will deal withthe specificities of the effects of the calendar and will present a reminder of themethodology of their estimation. Empirical results and interpretive grids throughthe study and comparative analysis of country-specific effects will be discussed inthe last section.

2 Literature review

Empirically, many studies have been conducted, but the general trend is that theapproaches used to measure the effects of Ramadan on economic activity were ba-sed on time series and econometric models. Thus Ladiray and al (2009) showed the

4

existence of the effects of the month of Ramadan on sectorial activity in Tunisia,using the model proposed by Hillmer and Bell (1983). In the same context, El-Guellab and al (2013) showed the impact of the month of Ramadan on food pricesand rail transport in Morocco, while retaining the basic model proposed by Young(1965).

Bukhari and Jalil Abdul (2011) used an econometric approach to demonstrate thepositive effect of Ramadan on mass money holdings and on the reduction of depo-sits in Pakistan. Norhayati and Lazim (2011) analyzed and attested to the effects ofthe holiday seasons, Aid el- Fitr, Chinese New Year and deepvall on activity in Ma-laysia, retaining an econometric specification with 3 types of regressors. Riazuddinand Khan (2002) demonstrated that foreign currency holdings are directly or indi-rectly affected by seasonal variations related to the Hijri and Gregorian months.Jin Lung Lin and Tian Syh Liu (2002) modeled the effects of the Hijri calendarholidays for Taiwan using regressors for each type of holiday. They had provedthat seasonal factors could not be determined effectively if the effects of the Hijricalendar were not taken into account.

Amrani and Skalli (2008) evaluated the mobile seasonality due to the lunar ca-lendar on Moroccan time series using a state space model. They concluded thatRamadan had a negative impact on passenger traffic.

3 Specificities and typology of calendar effects

Ramadan is the ninth month of the Hijri calendar that punctuates activity in manyMuslim countries. The officially calendar in most Muslim-dominated countriesis the Gregorian calendar. However, the consumption habits and lifestyle of theinhabitants continue to evolve in line with the festivities of the Hijri calendar wherethe year is 10 days less than the Gregorian year.

3.1 Specificities of the Gregorian and Hijri calendars

The Gregorian calendar is a calendar based on the movements of the earth aroundthe sun. Consisting of 12 months, the tropical Gregorian year is closer to the solar

5

year, with an average duration of 365,2435 days. This reconciliation was achievedby adding 97 days every 400 years. Leap years, which include an additional dayadded in February, are divisible by 4 or multiples of 400 years, with the exceptionof the centennial years. Thus, the years 1900, 2100, and 2200 are not leap yearsbut 1600, 2000, and 2400 are leap years.

The Hijri calendar is a 12-month lunar calendar, with an average duration of 29,530,589days. The common Hijri year has 354 days remaining 0.367068 days lower thanthe synodic lunar year. Thus, and in order to preserve a similar reproduction of thecalendar, were added 11 days every 30 years. The number of common hijri yearsis 19 during a 30-year cycle, while 11 years have an extra day and are commonlyknown as abundant years.

The determination of the rank of abundant years has been highlighted throughseveral algorithms, including the standard version which retains the years rankedin order 2, 5, 7, 10, 13, 16, 18, 21, 24, 26 and 29 as abundant years. The Kuwaitialgorithm is slightly different from the standard version, retaining the 15th insteadof the 16th year. A difference of one day can be recorded in some months over twoyears. The Indian tables consider the years ranked in order 2, 5, 8, 10, 13, 16, 19,21, 24, 27 and 29.

The overlapping of the two calendars (solar and lunar) and the differences madeon the occasion of the advent of the new lunar month lead to differences in termsof working days and holidays. As an illustration, the beginning of the month ofchawwal 1426, Eid el-Fitr’s day of celebration, corresponded to :

• Wednesday, 2 November 2005 in Libya and Nigeria ;

• Thursday, November 3, 2005 in 30 countries including Algeria, Tunisia, Egypt,Saudi Arabia and part of the United States ;

• Friday, November 4, 2005 in 13 countries including Morocco, Senegal, Iran,Bangladesh, South Africa, Canada, part of India and part of the United States ;

6

• Saturday, November 5, 2005 in a part of India.

These differences reflect the need to build a specific calendar for each country,in particular to capture the specificities in terms of calendar effects and facilitatecomparisons within and between countries

3.2 Typology of calendar effects

The effects of the calendar include movements related to the evolution and com-position of the calendar, in particular :

• Seasonality : some of the fluctuations related to the effects of the calendar aretaken into account in seasonal variations. Thus, although the effect of civil ho-lidays is not identical, taking into account a different monthly composition ofweeks, some of this effect is captured through seasonal fluctuations, becauseof its repetitive coincidence with the same month ;

• The length of the month : the months that have a higher number of days (31,instead of 30 or 28) experience greater variations in activity compared to shor-ter months ;

• The day effect of the week related to the number of days of each type (Sundayto Thursday ...) in each period. The same month can have for example 4 or 5Saturdays ;

• Public holidays : most holidays are linked to a date and not to a day (Indepen-dence Day, Labor Day, etc.) ;

• The effect of mobile events taking into account the effect of the festivitieswhose date changes over time, such as Eid el-Fitr, etc. ;

• The effect of Ramadan which constitutes a particular calendar effect requiringa specific treatment in order to capture it.

7

4 Methodology for estimating the effects of Ramadan

In general terms, the global model for estimating calendar effects, including theRamadan model, refers to a Reg-ARIMA type specification (ARIMA error regres-sion model) whose form is as follows :

X t = T D t +M Ht +Ot +ZtZt = T Ct +St + ItZt f ol l ow s a model ARI M A(p,d , q)(P,D,Q)s

With : X t : gross series, TD : vector of working days, MH : vector of events andmoving holidays (Passover, Ramadan, Chinese New Year, etc.), O : vectors of out-liers, TC : trend-cycle, S : seasonality and I : Irregular component.

The construction of regressors for trading days and mobile events requires the iden-tification of public holidays (civil holidays including occasional holidays, religiousfestivals and others). It also requires other parameters, in particular those relatingto the reference date of the concordance between the Gregorian and lunar calen-dars, the sequence of abundant years in the thirty-year cycle and the duration oflunar months.

5 Empirical Analysis

5.1 Data sources

The analysis of the effects of the month of Ramadan on consumer prices wasconducted by referring to the consumer price indices of the three countries (Mo-rocco, Senegal,Tunisia). These indices come respectively from the databases ofthe High Commission for Planning in Morocco, the National Agency of Statisticand Demography of Senegal and the Agency of Demography and Statistics of Tu-nisia. The base years of these indices are respectively 2006, 2008 and 2010 forthe 3 countries. The estimation period runs from January 2007 to September 2018for Morocco, from January 2009 to December 2018 for Senegal and from January2000 to September 2018 for Tunisia.

8

Due to the cultural and economic diversities of the three countries, harmonizationwork has been carried out with the aim of constructing a common IPC nomencla-ture for a better comparison of the effects of Ramadan among the three countries.Thus, a grouping of 104 common products for the three countries has been done.This grouping was done taking into account the reconciliations in terms of house-hold basket level of the 3 countries.

TABLE 0.1 – Mobile Religious Feasts by Country

Events Date Marocco Tunisia Senegal

Ras El Am 01 Muharram 1 1Achoura 10 Muharram 1Magal de Touba 18 Safar 1Mawlid 12 Rabia al awal 2 1 1 (Gamou)Mawlid (Baptême) 18 Rabia al awal 0Ramadan 01 Ramadan (29) (29) (29)Aïd el-Fitr 01 Chawwal 2 2 1 (Korité)Aïd el-Agha 10 Dhou al-hijja 2 2 1 (Tabaski)

5.2 Main Results

Effects of Ramadan on prices in Morocco

During the month of Ramadan, the food and culinary habits of Moroccans changewith the preparation of dishes specific to the festivities that mark the period ofbreaking the fast (from sunset to dawn). The composition of meals is geared to-wards foods that are higher in carbohydrates, proteins and lipids. Expenditures onfood consumption are significantly higher than in other months of the year, to thedetriment of some non-food items such as furniture and tourism. According to thestandard of living survey conducted by the HCP in 2007, urban and rural householdfood expenditure increased by 13.2% and 19.3%, respectively, compared with themonthly average. These increases are accompanied by increases in the retail pricesof food products, as evidenced by the results in Table 2. In particular, prices ofpastry and cakes, beef, fresh fish, cheese, eggs, dates and dried fruits are the mostsignificant increases.

9

On the other hand, the prices of pulses and fresh vegetables, which constitute thebasis of soups prepared for the breaking of fast, do not increase significantly, parti-cularly because of the abundance of local supply. Poultry and dairy prices are alsonot undergoing much change, thanks in part to the government’s commitment toprovide sufficient local market supply. As a result, imports of dairy products andmilk are increasing in the last month before Ramadan.

Excluding food, the effects of Ramadan on prices remain mixed. While women’sand children’s clothing and footwear prices are rising significantly during the se-cond half of Ramadan, in response to stronger demand on the eve of the Aid-Fitrholiday, the prices of women’s and children’s clothing and footwear are risingsignificantly of the second fortnight in Ramadan , furnishings are trending down-ward, reflecting, in part, adjustments in household spending on food. Prices fortourism and other accommodation services also fell during the month of Ramadan,which coincides with a steady decline in tourist overnight stays. This phenomenoncan be explained by the closure of most restaurants and leisure activities during theday.

TABLE 0.2 – Significance* at 10% of effect of Ramadan on consumer prices

Source : Our calculations

10

Effects of Ramadan on prices in Senegal

During the month of Ramadan, the consumption habits of Senegalese undergo aslight modification with an improvement of the contents of the dishes and intro-duction of a new dish before dawn. This dish is usually made with flour and se-molina. F.Ndoye (2001) shows that the consumption of flour-based dishes suchas "fondue", "caakry", "ngalakk" is very important during the month of Ramadancompared to the months of the year, which explains the noted effects of semolinaflour prices during the first half of the month of Ramadan.

The Prices of "beef" and "poultry" increase in the second half of the month ofRamadan, at the same time as their consumption. In Senegal, the breaking fast alsofavors the craze for certain products such as dates, cakes and biscuits, followedby traditional juices. This month encourages the increase in the prices of "biscuitcakes" and fresh juices following the increase in their demand. On the other hand,cheese prices are down during the second half of the month of Ramadan. The otherfood products undergo price changes during the month of Ramadan thanks to theeffort of the Senegalese government which carefully ensures the correct supplyof certain foodstuffs and staples and finally to maintain price stability during themonth of Ramadan.

Excluding food, the effects of Ramadan on prices remain distinct in Senegal. Theprices of children’s and women’s shoes show a significant increase respectivelyduring the month of Ramadan, especially during the second fortnight. On the otherhand, a drop in the price of food services, cafes and accommodation services isnoted during the second half of the month of Ramadan.

Effects of Ramadan on prices in Tunisia

Tunisian eating habits change also during the month of Ramadan and the consump-tion of some products increases significantly, which inevitably impact their prices.

For most Tunisians, dates and fresh milk are the favorite products for breaking fast.In addition the majority of meals throughout the month are made up of eggs and

11

cheeses such as Tajine, Brik, Salad. The evening is always animated by fruits andpastries. As a result the first fortnight is marked by rising prices of essential foodproducts for the Tunisian table such as eggs especially traditional, cheeses, beefand salted vegetables.

On the other hand, in the second half of Ramadan, prices for the products neededfor preparations for Eid El Fitr are increasing. In particular the prices of traditionalpastries like Makroudh or Baklawa. In addition, fish dishes are the most popularat Eid El Fitr, especially since Tunisian families traditionally prepare salting fish.And towards the end of the month, clothing purchases intensify. In spite of the factthat the price increase is not significant on the whole clothing item, it remains verysignificant on price sub-items like trousers for girls or men’s suits.

The month of Ramadan does not only have a positive effect on prices, prices foraccommodation services, restaurants and other similar establishments are decli-ning as a result of the drop in demand, while overnight stays are falling and severalinstitutions are closing in this month. The impact of the month of Ramadan andEid on prices is tangible despite the fact that several products have an administeredprice and the state is making a considerable supply effort to have a buffer stock tocurb the slippage in prices.

Comparative analysis of the effects of Ramadan on prices Morocco, Senegal Tunisia

The effects of Ramadan on consumer prices were more important in Morocco thanin Tunisia or Senegal (see Graphic 1). Ramadan would cause a rise of between0.24% and 10.7% of the prices of certain food products, instead of a maximumof 2.5% and 3.3% respectively for the Tunisia and Senegal. These fluctuations arepart of the dynamics of household food demand and reflect, in part, disparities interms of public price regulation at the level of the three countries. In fact, if, on thewhole, the prices administered by the Moroccan State do not exceed 19 productsand services, of which only two are of the food type, the list of prices subject tosupervision or approval at the stage of production or the sale retains 55 products inTunisia, of which 24 are food. In Senegal, although food prices are liberalized, with

12

the exception of bread, wheat flour, crystallized sugar, and edible oil, governmentsoften intervene to relocate certain products which are experiencing strong cyclicaldemand (Ramadan) under temporary administrative fixation.

FIGURE 0.1 – Effects of the Ramadan on consumer prices (%)

The results of the study also showed differences in terms of the evolution of Ra-madan’s effects on prices in the 3 countries. The simulation exercise, carried outover the last 7 years by gradually introducing an observation made at the end ofthe sample, highlights other stylized facts. The effects of Ramadan on prices tend,in fact, to increase over time in Tunisia and Senegal. By way of illustration, theestimated coefficients of the effects of Ramadan on the prices of fresh fish, cheese,dates, pastry and cakes and flour and semolina have experienced a rising trend overthe course of 7 years of simulation. Similarly, the estimated coefficients for freshfruits, date and pastry and cake prices increased in Senegal during the simulationperiod, although they remained insignificant. In Morocco, on the other hand, therewas a slight trend reduction in the effects of Ramadan on food prices with theexception of fresh fruit, which was on the rise during the simulation period.

13

FIGURE 0.2 – Evolution of the ramadan pa-rameter relating to the CPI of pastry and cakes

in Morocco(statistic simulation over the period

2012-2018)

FIGURE 0.3 – Evolution of the ramadan pa-rameter relating to the CPI of pastry and cakes

in Senegal (statistic simulation over the period

2013-2017)

FIGURE 0.4 – Evolution of the ramadan pa-rameter relating to the CPI of pastry and cakes in

Tunisia(statistic simulation over the period 2012-

2018)

The differences in terms of the significance and evolution of the effects of Rama-dan on prices at the level of the three countries mask, however, a certain similarityin terms of sensitivity. The correlation examination of the estimated coefficientsfor 15 selected products showed a strong correlation (0.86) between the effects re-corded in Morocco and Tunisia. Overall, the 3 countries experienced an increasein the prices of some food products during the month of Ramadan. There is there-fore a strong trend towards convergence of food consumption levels between the3 countries. This phenomenon could come from the homogenization of food prac-tices, which are increasingly subject to internationalization, particularly with thegradual improvement of the use of new technologies.

FIGURE 0.5 – Correlation between the estimatedcoefficients of the Ramadan effects price (Senegal-Tunisia)

FIGURE 0.6 – Correlation between the estimated co-efficients of the Ramadan effects price (Marocco-Tunisia)

14

Conclusion

In this article, we have recalled the principles of construction of the regressorsconcerning the calendar of the Hijri.A preview was given for both calendars (Gre-gorian and Hijri). The data used in this exercise are from the consumer price in-dices of the three countries. In view of the difference noted in the three countries, acommon nomenclature of 104 products of the consumer price index was adopted.

The objective of this study was to measure the effects of Ramadan Month on pricesand to make a comparative analysis between the three countries : Morocco, Senegaland Tunisia. The study was conducted considering the calendar of the hijri of eachcountry. Similarities were noted with regard to the effects of Ramadan at the levelof the three countries. For example, cake confectionery prices rise to a level ofthree during the month of Ramadan.

On the other hand, the study showed price movements linked to sometimes dif-ferent cultural practices between countries. In Morocco, dates are traditionallyserved at the time of the breakup of the young. In Senegal, for the dawn meal,traditional dishes (tiakry, ngalakk, based) are prepared with flour and semoule. ForTunisia, the consumption of brick (eggs, cheese, etc.) is very important during themonth of Ramadan.

15

Annexes

TABLE 0.3 – Ramadan first half effects on prices

Source : Our calculations

TABLE 0.4 – Ramadan second half effects on prices

Source : Our calculations

16

Referencies

[1] Bell W.R and HILMER S.C (1983) , Modelling time series with calendar va-riation

[2] Fournier, J-M., Ladiray, D. (1995), Les effets de calendrier dans l’analyseconjoncturelle de la production, Economie et Statistique, 285-286, 115-126.

[3] Fournier, J-M., Nemsia, H. (1997), Une correction de l’effet Ramadan, Stateco,86, 39-63.

[4] Grun-Rehomme, M., Ladiray, D. (1996), Les effets de calendrier dans l’analysedes séries temporelles, Methodologican°4, Université Libre de Bruxelles.

[5] Ibrahim Amrani, AbedelhalimSkalli (2008), Evaluation de la saisonnalité mo-bile due au calendrier lunaire sur les séries chronologiques par application du mo-dèle espace d’état

[6] Ladiray et al (2009), les effets du calendrier dans les séries tunisiennes

[7] NorhayatiShuja’, Mohd Alias Lazim and Yap Bee Wah11, Moving HolidayEffects Adjustment for Malaysian EconomicTime Series

[8] Syed Kalim HyderBukhari and Jalil Abdul and Nasir HamidRao (2011), De-tection and Forecasting of IslamicCalendar Effects in Time Series Data :Revisited

[9] W.R. Bell and S.C. Hilmer , modeling times series with calendar variation