Price Monitoring for Food Security in the Kyrgyz Republic, Issue # 47 | 19 November 2021 [EN/RU]

Situation Report
Originally published


Situation Update

Economic activity in the Kyrgyz Republic is recovering at a moderate pace. From January-October 2021, GDP increased by 1.6 percent compared to the previous year, totalling 506 billion Kyrgyz soms (USD 6.6 billion). The decline in production of the main sectors of the economy was in agriculture (-4.4 percent) and construction (-5 percent), while the production of industry (+0.1 percent) and trade (+10.2 percent) improved. There was a positive inflow of foreign currencies into the country with formal remittances increasing by 20.6 percent, amounting to USD 1.4 billion compared to the same period last year. In October 2021, compared to the same period last year, the Consumer Price Index (CPI), which measures price inflation, increased by 11.9 percent for all goods and services and by 18.8 percent for staple foods. The increase in the cost of a number of administrative prices and tariffs further contributed to headline inflation. The CPI for fuel and lubricants is estimated to be at +32 percent, leading to an increase of transportation costs.

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 42.1 percent, barley by 46.1 percent, oil crops by 25.5 percent, potatoes by 2.7 percent, melons by 13.3 percent, fruit and berry crops by 4.2 percent and vegetables by 0.9 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 the Kyrgyz Republic will lead to continued growth in consumer prices for 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 accounts for 65 percent of their expenses, and are affecting households’ access to a nutritious diet, vital for all-around growth and development. To mitigate further deterioration, the Government 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. Additionally, the Government 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 Antimonopoly Agency will continue the monitoring of fuels and lubricants prices, and issuing recommendations to prevent an unjustified increase of fuels and lubricants prices.