Kyrgyzstan

Price Monitoring for Food Security in the Kyrgyz Republic, Issue # 48 | 17 December 2021 [EN/RU]

Attachments

Situation Update

Economic activity in the Kyrgyz Republic is recovering at a moderate pace, although pre-pandemic levels are still out of reach. From January-November 2021, GDP increased by 2.4 percent compared to the previous year, totalling 626 billion Kyrgyz soms (USD 7.4 billion). While this increase is driven by the service sector (+6.1 percent) and improvement of agriculture (+1.4 percent), the restraining factor is still the decline in production of the main sectors of the economy: industry (-1.7 percent) and construction (-1.3 percent). ADB forecasted a growth of 3.5 percent for 2021 and a 5 percent growth for 2022, while Ministry of Economy and Commerce projected a growth of 6.1 percent for 2022.

There was a positive inflow of foreign currencies into the country with formal remittances increasing by 16.6 percent, amounting to USD 1.6 billion compared to the same period last year. In November 2021, compared to the same period last year, the Consumer Price Index (CPI), which measures price inflation, increased by 12 percent for all goods and services and by 18.4 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 +35.7 percent, leading to an increase in 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 almost two times or by 42 percent, barley by 46 percent, oil crops by 25.4 percent, sugar beet by 19 percent, potatoes by 2.9 percent, melons by 14 percent, fruit and berry crops by 3.9 percent, corn by 3.3 percent and vegetables by 1.2 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, the possible limited availability of staple foods due to decreased yields in the Kyrgyz Republic, the increase of tariffs for public transportation due to the significant increase of fuel prices 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.