From January-July 2021 there was a positive inflow of foreign currencies into the country with formal remittances increasing by 31.1 percent, amounting to USD 1.1 billion compared to the same period last year.
Yet, from January-August 2021, GDP remained 0.7 percent lower compared to the previous year, totalling 405 billion Kyrgyz soms, due to the decline in industry, construction and agriculture sectors. In August 2021, compared to the same period last year, the Consumer Price Index, which measures price inflation, increased by 11.7 percent for all goods and services and by 18.8 percent for staple foods. A possible increase in the cost of a number of administrative prices and tariffs could further contribute to headline inflation in 2021. The abnormally high temperature this summer and the lack of irrigation water during the growing season led to a decrease in the yield of grain crops. The harvest of wheat decreased by 45.5 percent, barley - by 55.2 percent, potatoes - by 10.1 percent, melons - by 6.7 percent, fruit and berry crops - by 6.5 percent and vegetables - by 2.4 percent. This creates the risk of a decrease in egg production during winter due to the lower availability of feeding crops and consequently higher prices.
The observed increase in food prices in world markets, the limited supply in producing countries and the possible limited availability of staple foods due to decreased yields in Kyrgyzstan will lead to continued growth in consumer prices in the country in the remaining months of 2021 and in the first half of 2022. Rising food prices worsen the purchasing power of poor households, for which food already represent 65 percent of their expenses, and are affecting households’ access to a nutritious diet, vital for all-around growth and development. To mitigate a further deterioration, the Government has purchased wheat for 1.5 billion KGS (approximately 17.7 million USD), and vegetable oil and sugar for 300 million KGS (approximately 3.5 million USD), for Material Reserve and continues to monitor and stabilize food markets across the country through price controls on 11 essential food items and to regulate import and export volumes.
The following section discusses the average prices for the four weeks from 27 August to 24 September 2021 in comparison to the previous four weeks, the previous month’s average (August 2021), the monthly average in February 2020 (before the COVID-19 outbreak began in the country) and the annual average of September 2020.