This issue of the Price Monitoring Bulletin is prepared based on the operational daily food price data collected by the National Statistics Committee from 18 markets across the country and disaggregated at province level as the average value (Chuy province - Tokmok, Kara-Balta; Osh province - Osh, Uzgen, Kara-Suu and Nookat; Talas province - Talas and Manas; Naryn province - Naryn and Chaek; Batken province - Batken and Isfana; Jalal-Abad province - Jalal-Abad, Toktogul and Kerben; Yssyk-Kul province - Karakol and Balykchy; and Bishkek city). This is a secondary data analysis.
SITUATION UPDATE: Since March 2020, the COVID-19 global pandemic and its resulting negative impacts on the global economy have led to a recession in the economies of many countries, including the Kyrgyz Republic. In addition, the recent political instability is likely to further contribute to the deterioration of the economy. The situation in regard to COVID19 worsened in the country in October 2020 rising to 422 COVID-19 cases on 19 November, suggesting a second wave has begun. Compared to the same period last year, the Kyrgyz Republic’s GDP decreased by 7.4 percent totaling 457 billion Kyrgyz soms from January to October 2020. Negative trends were observed in the construction (-11.5 percent), wholesale and retail trade (-16 percent) economic sectors, while the agriculture sector improved by 0.8 percent. Compared to the same period last year, the Consumer Price Index, which measures price inflation, increased by 5.8 percent for all goods and services and by 10.7 percent for staple foods (cereals, meat, fish, milk and dairy products, fruits and vegetables). According to the latest updates of the National Statistics Committee (23 October), wheat production increased by 4.7 percent, while potato production decreased by 3.2 percent. The Government continues to monitor and stabilize food markets across the country through establishing price controls on 11 essential food items and regulating import and export volumes.
The following section discusses the average prices for the two weeks from 4 to 18 November 2020 in comparison to the previous two weeks, the monthly average of February 2020 (before the COVID-19 outbreak began in the country), the previous month’s average (October 2020) and the monthly average in November 2019. The weekly monitoring of food prices reveals the fluctuations of several commodities with a significant increase of potato prices:
• WHEAT: During the weeks from 4 to 18 November 2020, the national retail prices of wheat increased by 2 percent from the previous two week’s levels, reaching an average price of 22.69 KGS/Kg. As of 18 November 2020, the highest price of wheat was observed in Jalal-Abad and Batken provinces (24 KGS/Kg) and the lowest price was in Naryn province (16 KGS/Kg). The rise in the average national prices was in line with an increase of the wheat export prices in the Russian Federation. Compared to October 2020 and February 2020, the prices were 1 percent and 19 percent higher, respectively. The prices were 24 percent higher compared to November 2019 and continues to be higher than normal annual price fluctuations, within 15 percent of the benchmark.
• WHEAT FLOUR (1st grade): The national retail prices of wheat flour increased by 2 percent from the previous two week’s levels, reaching a national price average of 39.55 KGS/Kg. As of 18 November 2020, the highest price was in Bishkek city, Jalal-Abad, Batken and Osh provinces (40 KGS/Kg) and the lowest was in Naryn province (35 KGS/Kg). Prices remained unchanged compared to October, while they were 18 percent higher than February 2020 levels. However, the prices were 20 percent higher compared to November 2019, an increase above normal annual price fluctuations. The stability of wheat and wheat flour price is critical as it remains one of the most consumed staples in the country.
• POTATOES: The national retail prices of potatoes continued to grow by another 5 percent from the previous two week’s levels, reaching a national average of 25.11 KGS/Kg. As of 18 November 2020, the highest price was observed in Bishkek city (27 KGS/Kg), while the lowest price was in Yssyk-Kul province (20 KGS/Kg). Compared to October 2020 and February 2020, prices were 10 percent and 14 percent higher, respectively. The prices were 33 percent higher compared to November 2019, which is significantly higher than normal seasonal price fluctuations.
• OIL (COOKING): From 4 to 18 November, the national retail prices of vegetable oil rose by another 3 percent from the previous week’s levels (128.25 KGS/Kg), reaching the highest value of all time. As of 18 November 2020, the highest price was in Batken province (133 KGS/kg) and in Naryn province (134 KGS/kg) and the lowest in Chuy province (117 KGS/ kg). The Kyrgyz Republic has a high import dependency on vegetable oil due to its low internal production and low capacity for the processing of oil seeds. The increasing trend of vegetable oil prices is caused by the growing export prices in the Russian Federation, attributed to unfavorable weather conditions, a consequently lower harvest and the depreciation of the Russian ruble against the US dollar. Compared to October 2020 and February 2020, the prices were 5 percent and 34 percent higher, respectively. The prices were 34 percent higher compared to November 2019, an increase above the normal annual price fluctuations.
• SUGAR: The national retail prices of sugar continued to grow by 2 percent from the previous week’s levels, reaching an average price of 53.30 KGS/Kg. The increase in sugar prices was in line with global trends, as historically proven by the positive correlation between global and national prices. As of 18 November 2020, the highest price was observed in Batken province (56 KGS/Kg), while the lowest price was in Chuy province (49 KGS/Kg). The prices of sugar were 2 percent and 30 percent higher than October and February 2020 levels, respectively. The sugar prices rose by 26 percent compared to November 2019, which is significantly higher than normal annual price fluctuations.
• MEAT (BEEF and MUTTON): During the weeks from 4 to 18 November 2020, the national retail prices of meat increased by 5 percent for beef and by 3 percent for mutton compared to the previous two week’s levels, leading to an average price of 415.09 KGS/Kg for beef and 391.92 KGS/Kg for mutton. As of 18 November 2020, the highest prices for beef and mutton were observed in Osh province at 433 KGS/Kg and 445 KGS/Kg, respectively. The prices for beef increased by 5 percent and the price for mutton by 2 percent compared to October levels and by 21 percent and 29 percent compared to February 2020, respectively. The prices of beef and mutton were 21 percent and 29 percent higher, respectively, compared to November 2019, an increase above normal annual price fluctuations.
EXCHANGE RATE: During the two weeks from 4 to 18 November 2020, the Kyrgyz som depreciated by almost 1 percent from 84 KGS to 84.80 KGS per 1 USD, the Russian ruble appreciated from 80 RUB to 76.3 RUB per 1 USD and the Kazakh tenge appreciated from 433 KZT to 428 KZT per 1 USD. However, these currencies depreciated by 21 percent, 14 percent and 12 percent, respectively, against the US dollar since the beginning of March 2020, according to the exchange rate of the National Bank. Lower remittances levels were among the factors affecting the weakening of the external position of the Kyrgyz som. During the February-July 2020 period, remittances decreased by 9 percent compared to the same period in 2019. The recent political unrest and related uncertainty also contributed to the weakening of the national currency. Currency movements are one of the main driving forces of the retail prices of imported basic food commodities including wheat, vegetable oil and sugar.
GLOBAL OIL PRICES: Since the beginning of 2020, crude oil prices have slumped dramatically following the lockdowns, travel restrictions and the decline in consumer demand with the spread of the COVID-19 pandemic, further impacting the global economy. According to global forecasts, the full recovery of oil demand levels may not take place until 2022.
During the weeks from 2 to 16 November 2020, global oil prices slightly improved its position due to the temporary recovery in fuel demand and though remained under pressure. It could be derailed by a rise in the pace of coronavirus infections around the world. The pandemic may force countries to reinstitute lockdown measures that will slow economic growth and curb energy demand. WTI prices increased from 36.60 USD per barrel to 41.14 USD per barrel, while Brent prices increased from 37.78 USD per barrel to 42.71 USD per barrel. As of 16 November, both WTI and Brent prices remained 12 percent and 19 percent lower, respectively, than March 2020 levels.
AVAILABILITY: Since the last price monitoring issue, the availability of wheat and wheat flour improved overall in Osh province and slightly decreased in Chuy and Talas provinces.
Thirty-four districts showed good levels of availability though the situation was critical in Aksy and Bazar-Korgon (Jalal-Abad), Alay (Osh), Bakay-Ata (Talas) and Yssyk-Ata (Chuy) districts. Considering the prevalence of poverty, the share of income spent on food by the poor and the high retail prices in the province that may affect their access to food, particular attention should be devoted to districts in Jalal-Abad province as insufficient availability may further hinder the ability of the poor to consume wheat and wheat flour. In the past two weeks, the availability of vegetable oil remained critically unvaried in Osh and Chuy provinces while decreased in all other provinces. Only thirteen districts showed ‘sufficient’ stocks levels. Given the high poverty rate in Batken (33 percent) and the highest retail price, the most dramatic situation was observed in Leilek where ‘insufficient’ availability may have further hindered the ability of the most vulnerable to consume vegetable oil. Compared to the previous two weeks, the availability of sugar slightly increased in Chuy and Osh provinces, while it worsened in Batken and Jalal-Abad provinces. Overall, the situation remained critical with ‘insufficient’ or ‘severely insufficient’ stock levels in thirtyone districts. Considering the high incidence of poverty, the high prices and the scarce availability, particular attention should be devoted to Leilek and Batken districts in Batken province