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 have further contributed to the deterioration of the economy. The situation in regard to COVID19 worsened in the country in October 2020 rising to 335 COVID-19 cases on 2 December, 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), and wholesale and retail trade (-16 percent) economic sectors, while the agriculture sector improved (+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). At the same time, the economic access of poor populations has weakened over the past six months of 2020, with the poorest populations spending 60 percent of its income on food as a national average, with higher provincial rates in Yssyk-Kul province (77 percent), Bishkek city (72 percent) and Chuy province (70 percent), according to the National Statistics Committee. 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 18 November to 2 December 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 in potato prices:
• WHEAT: During the weeks from 18 November to 2 December 2020, the national retail prices of wheat remained stable from the previous two weeks’ levels, with an average price of 22.64 KGS/Kg. As of 2 December 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 (15 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 decreased by 1 percent from the previous two weeks’ levels, reaching a national price average of 39.32 KGS/Kg. As of 2 December 2020, the highest price was in Bishkek city, Jalal-Abad, Chuy, Batken and Osh provinces (40 KGS/Kg) and the lowest was in Naryn province (35 KGS/ Kg). Prices remained unchanged compared to October 2020, while they were 19 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 9 percent (or a 2.15 KGS increase) from the previous two weeks’ levels, reaching a national average of 27.32 KGS/Kg. As of 2 December 2020, the highest price was observed in Bishkek city and Osh province (29 KGS/Kg), while the lowest price was in Naryn province (23 KGS/Kg). Compared to October 2020 and February 2020, prices were 19 percent and 24 percent higher, respectively. The prices were 45 percent higher compared to November 2019, which is significantly higher than normal seasonal price fluctuations.
• OIL (COOKING): From 18 November to 2 December, the national retail prices of vegetable oil rose by another 3 percent from the previous two weeks’ levels (132.03 KGS/Kg), reaching the highest value of all time. As of 2 December 2020, the highest price was in Jalal-Abad province (142 KGS/kg) and in Osh province (140 KGS/kg) and the lowest in Talas province (123 KGS/kg). The Kyrgyz Republic has a high import dependency on vegetable oil due to its low internal production and its 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 November 2019, the prices were 8 percent and 38 percent higher, respectively. An increase above the normal annual price fluctuations.
• SUGAR: The national retail prices of sugar continued to grow by 1 percent from the previous two weeks’ levels, reaching an average price of 53.37 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 2 December 2020, the highest price was observed in Batken and Osh provinces (56 KGS/Kg), while the lowest price was in Chuy province (50 KGS/Kg). The prices of sugar were 2 percent and 29 percent higher than October and November 2019 levels, respectively. An increase significantly higher than normal annual price fluctuations.
• MEAT (BEEF and MUTTON): During the weeks from 18 November to 2 December 2020, the national retail prices of meat increased by another 4 percent for beef and by 2 percent for mutton compared to the previous two week’s levels, leading to an average price of 430.17 KGS/Kg for beef and 401.22 KGS/Kg for mutton. As of 2 December 2020, the highest prices for beef were observed in Bishkek city at 445 KGS/Kg and for mutton in Osh province at 445 KGS/Kg, respectively. The prices for beef increased by 9 percent and the price for mutton by 4 percent compared to October 2020 levels and by 25 percent and 32 percent compared to November 2019, an increase above normal annual price fluctuations.
EXCHANGE RATE: During the two weeks from 18 November to 2 December 2020, the Kyrgyz som remained relatively stable at 84.8 KGS per 1 USD, the Russian ruble remained stable at 76 RUB per 1 USD and the Kazakh tenge appreciated from 428 KZT to 425 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 and will only slightly improve in the fourth quarter due to a slowdown in global travel and a still healing economy. During the weeks from 16 to 30 November 2020, global oil prices slightly improved its position due to the temporary recovery in fuel demand and the hopes for the development of a successful coronavirus vaccine. WTI prices increased from 41.14 USD per barrel to 45.2 USD per barrel, while Brent prices increased from 42.71 USD per barrel to 46.84 USD per barrel. As of 30 November, both WTI and Brent prices remained 3 percent and 11 percent lower, respectively, than March 2020 levels.
AVAILABILITY: Since the last price monitoring issue, the availability of wheat and wheat flour slightly decreased in Osh, Jalal-Abad and Chuy provinces, while it remained unvaried elsewhere. Overall, the availability of wheat and wheat flour is good. Thirty-one districts showed good levels of availability though the situation was critical in eight districts. Considering the prevalence of poverty in the country, the share of income spent on food by the poor and the high retail prices in the provinces 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 improved in Naryn and Yssyk-Kul provinces, while it remained critically unvaried in all other provinces. Only fourteen districts showed ‘sufficient’ stock levels. Given the high poverty rate in Batken province (33 percent), the most dramatic situation was observed in Leilek district 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 worsened in Talas and Yssyk-Kul provinces, while it remain unchanged in all other provinces. Overall, the situation remained critical with ‘insufficient’ or ‘severely insufficient’ stock levels in thirty-one 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.