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Yemen's recognised government has raised the US dollar exchange rate used to calculate customs duties on non-essential goods by 50 percent, effective Tuesday, a document and traders said.

The decision applies only to south Yemen, which the government controls, including the port city of Aden. The country's main entry point for commodities, Hodeidah port, is held by the Houthi movement, which has a different exchange system.

Yemen imports most of its needs, with more than seven years of war resulting in an economic collapse and leaving 80 percent of the population reliant on aid.

Economists warn of an economic catastrophe as a result of the government of Aden raising the price of the customs dollar, as the increase in the customs of imported materials will reach 50%, which will double the prices of consumer goods to 50% from what it is currently.

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Yemen's Cabinet meeting approved a decision to hike duties to 750 Yemeni riyals from 500 on 8 January, a document reviewed by Reuters showed.

Three Aden-based traders, including Abu Bakr Salem, deputy chairman of Yemen's Federation of Chambers of Commerce, confirmed the decision, adding that it went into effect on Tuesday.

The amended rate for customs is still far below the current exchange rate of 1,250 riyals to the dollar in Aden, the government's interim seat where protests have broken out over high prices and non-payment of wages.

Fuel and other commodity prices spiked in Aden and Marib on Tuesday following the decision, the traders said. Wheat, rice, milk and medicine are exempt from duties.

Yemen's warring sides have rival central banks. The government has resorted to money-printing to finance the deficit, but in Houthi-held areas, where new notes are banned, the rate is around 600 riyals to the dollar.

Yemen's conflict has shifted to a no-war, no-peace stalemate as the fighting has largely stopped, but both parties have failed to renew a United Nations-brokered ceasefire.

The government's public finances have worsened over the last six months after the Houthis ramped up attacks on the southern oil terminals, preventing the exports from oilfields there.

(Reuters)