SITUATION UPDATE: The development of the global economy remains uncertain amid the impacts of the COVID-19 pandemic. International trade shows a decline in volumes, while the global commodity markets remain uncertain. All these factors continue to have a constraining effect on both the growth of the global economy and the economy of the Kyrgyz Republic. In January-February 2021, the Kyrgyz Republic’s GDP decreased by 8.9 percent totalling 71.5 billion Kyrgyz soms. Negative trends continued to be observed in the construction, wholesale and retail trade sectors. The service sectors (49 percent) accounted for the highest share of GDP. The Consumer Price Index, which measures price inflation, increased by 10.4 percent for all goods and services and by 19 percent for staple foods (+24.6 percent for meat, +11.6 percent for bread products, +11.4 percent for milk and dairy products, +44.2 percent for oils and fats, +18 percent for vegetables, and +22.6 percent for sugar). While the increase in meat prices was driven by the high demand from neighbouring countries, the rise of other staple food prices was due to higher import prices. Rising food prices are affecting households’ access to a nutritious diet, especially during the lean season (winter – spring). The Ministries of Economy and Finance reached an agreement with retail chains and product suppliers to ensure the purchase of certain food products (sunflower oil (excluding premium segment), first grade flour, granulated sugar and tin-formed bread) by the population at stable prices. The Government continues to monitor and stabilize food markets across the country through 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 24 February to 10 March 2021 in comparison to the previous two weeks, the previous month’s average (February 2021), the monthly average in February 2020 (before the COVID-19 outbreak began in the country) and the annual average of March 2020 (when appropriate). The biweekly monitoring of food prices revealed the fluctuations of several commodities:
• WHEAT: During the weeks from 24 February to 10 March 2021, the national retail prices of wheat remained stable from the previous two weeks’ levels, with an average price of 23.99 KGS/Kg. As of 10 March 2021, the highest price of wheat was observed in Bishkek city and Batken province (25 KGS/Kg) and the lowest price was in Naryn province (16 KGS/Kg). Globally, higher cereal prices were driven by lower production forecasts in major exporting countries, new and rumoured export restrictions, and export wheat taxes in some major producing countries. Wheat prices rose in most major exporting countries in December and early January and reflected news of new export restrictions in the Russia Federation. Prices remained stable compared to February 2021, but were 26 percent higher compared to February 2020, and continued to be higher than normal annual price fluctuations, within 15 percent of the benchmark.
• OIL (COOKING): The national retail prices of vegetable oil rose by another 2 percent from the previous two weeks’ levels (157.60 KGS/l), reaching the highest value of all time. As of 10 March 2021, the highest price was in Naryn province (164 KGS/l) and the lowest was in Yssyk-Kul province (150 KGS/l). 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 trend of increasing vegetable oil prices was caused by the increasing export prices in the Russian Federation and Kazakhstan, attributed to unfavourable weather conditions and a consequently lower harvest. Compared to February 2021 and February 2020, the prices were 2 percent and 65 percent higher, respectively, an increase above normal annual price fluctuations.
• SUGAR: The national retail prices of sugar increased by another 3 percent from the previous two weeks’ levels, to an average price of 62.55 KGS/Kg. The recent increase in sugar prices was in line with global trends, as historically proven by the positive correlation between global and national prices. Globally, sugar prices increased in 2020 due to the prospect of lower sugar outputs in both Brazil and India, the two largest sugar-producing countries, caused by below average rainfalls. As of 10 March 2021, the highest price was observed in Batken province (67 KGS/Kg), while the lowest price was in Naryn and Yssyk-Kul provinces (61 KGS/Kg). The prices of sugar were 4 percent and 43 percent higher than February 2021 and March 2020 levels, respectively, an increase significantly higher than normal annual price fluctuations. The price of sugar was 52 percent higher compared to February 2020.
The rise in prices for sunflower oil and sugar is associated with an increase in suppliers’ prices, their significant reduction in volume due to poor harvests, as well as the depreciation of the national currency. The government has imposed a ban on the export of sugar and vegetable oil due to the rise in prices.
• MEAT (BEEF and MUTTON): During the weeks from 24 February to 10 March 2021, the national retail prices of meat remained stable for mutton and beef compared to the previous two weeks’ levels, with an average price of 447 KGS/Kg for beef and 440.42 KGS/Kg for mutton. As of 24 February 2021, the highest prices for beef were observed in Bishkek city at 453 KGS/Kg and for mutton in Osh province at 457 KGS/Kg. The latest increase in the prices of meat in Kyrgyzstan was caused by the restrictions imposed by Kazakhstan on the export of meat and livestock, which boosted the demand from Uzbekistan and encouraged Kyrgyzstan to increase its exports to Uzbekistan. The prices for beef and mutton increased by 1 percent compared to February 2021 levels. The prices of beef and mutton rose by 26 percent and 30 percent, respectively, compared to March 2020, and by 28 percent and 37 percent, compared to February 2020, an increase above normal annual price fluctuations.
• EGGS: The national retail price of eggs remained stable from the previous weeks’ levels, reaching 105.96 KGS/10 pcs. The trend of increasing egg prices over the past months was caused by the growing export prices in Kazakhstan attributed to an increase of feed (wheat) prices and the instability of the currency exchange. As of 10 March 2021, the highest price was observed in Talas province (117 KGS/10 pcs) and the lowest in Batken province (101 KGS/10 pcs). The price of eggs remained stable compared to February 2021 and was 38 percent higher compared to February 2020, significantly higher than normal annual price fluctuations.