What Is Causing Inflation in Kazakhstan

Despite the efforts of Akorda and «the Library» to remedy the situation by any means possible, the retail prices and tariffs, first of all, the grocery prices, have jumped up in 2019 in Kazakhstan. Even the state statistics confirms this fact.

The Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan has recently published its latest press-release on the level of inflation in the country based on the results of the 11 months of the year 2019. Let us quote its two key passages:

«For the period from January to November 2019, inflation in Kazakhstan constituted 4,7%. During the 11 months of the current year (November 2019 against December 2018), the prices for groceries had risen by 8,4%, the prices for non-grocery goods — by 4,3%, for chargeable services — by 0,4%».

«Since the start of the current year (November 2019 against December 2018), there had been registered an increase of prices for the following goods: flour — by 24,8%, rice — by 23,5%, grain — by 22,6%, frozen fish — by 17,3%, lamb — by 15,9%, beef — by 15,4%, bread — by 15,2%, horse meat — by 14,6%, potato — by 14%, alimentary products — by 12,1%, poultry — by 11,6%, pork — by 10,6%, butter — by 10,2%, coffee, meat products — by 9,6%, rennet cheese— by 9%, eggs — by 8,6%, bun goods and baked goods— by 8,3%, tea — by 6,9%. The prices for tobacco products had increased by 11,7%, refreshment beverages — by 11,6%, alcoholic beverages — by 7,2%. A decrease of prices for sugar (by 18,6%), fresh vegetables (by 8,4%) had been registered».

Thus, the state statistics whose quality and trustworthiness may very well be challenged does, nonetheless, confirm the fact that, in 2019, Kazakhstan’s retail prices and tariffs have surged up, particularly the prices for groceries. And this is very bad not only for the citizens and the visitors of the country most of whom not so much live as survive but for Akorda and «the Library» as well since the high inflation level always influences the social moods in a negative way.

In view of this, a legitimate question arises:

why the retail prices and tariffs for the key products in the Kazakhs’ food ration (flour, rice, grain, lamb, beef, horse meat, potato, alimentary products, poultry, butter) for the period from January to December of the current year have jumped up so drastically?

There can be a number of answers depending on who is answering — a consumer, an entrepreneur producing groceries or a state official responsible for the issue. Nonetheless, it appears that the main reasons for the growth of the retail prices and tariffs in Kazakhstan lie in the following:

1) a significant increase of the social support of the citizens on the part of the state that started at the end of last year (probably when the First President of the Republic of Kazakhstan made the final decision to leave the presidential post and hand it over to Kasym-Zhomart Tokayev) and is still happening albeit in smaller sizes;

2) the growth of labor costs for the state, quasi-governmental structures and enterprises (under the pressure of the state agencies).

In connection to this, let us remind you that, according to the Statistics Committee data, «for the period from January to November 2018, the inflation in the Republic of Kazakhstan constituted 4,6%. The prices for groceries had increased by 3,8% over the 11 months of the current year (November 2018 against December 2017); the prices for non-grocery goods increased by 5,9%, for chargeable services — by 4,2%».

However, the list of the groceries that went up in price was shorter and the speed of the price growth was slower. «From the start of the current year (November 2018 against December 2017), a price increase had been registered for the following products: sugar — by 21,2%, white cabbage — by 13,3%, rennet cheese — by 11,3%, preserved milk — by 9,8%, fermented milk products — by 6,7%, fresh milk — by 6,6%, butter — by 8,8%, sunflower oil — by 6,6%, eggs — by 3,8%, horse meat — by 9,1%, meat products, sausage products — by 6,6%, pork — by 6,2%, beef — by 5,9%, lamb — by 5,6%. A decrease of the price for buckwheat was also registered (by 21,1%)».

So, according to these data, the 2019 inflation level in Kazakhstan estimated for 11 months turned out to be higher than the 2018 indicators by 0,1% only (in absolute amount). With that, however, this year’s growth of the grocery prices turned out to be much higher than that of 2018 (8.4% against 3,8%). The chargeable services have saved the situation (but only for Akorda and «the Library» and not for the majority of the Kazakhs). For the period from January to November (against December of last year), the dynamics of retail tariffs for them constituted only 100,4% against 104,2% for the corresponding period of 2018.

In other words, having solved (or almost having solved) the task of containing inflation thanks to the massive administrative pressure exerted on the utility service providers, the government and the National Bank of the Republic of Kazakhstan have simultaneously inflicted a powerful blow on the material and, therefore, social wellbeing of that significant part of the Kazakhs that spend most of their money on groceries.

With that, one should note that, if the expenses for utilities can, in theory, be lessened via a) economizing, b) stealing, c) failure to make payments, d) reduction of residential area or sharing it with other citizens, then it is much harder to do the same with groceries. This is the reason why the country is now enamored with all kinds of discounts. This is also the reason why marketplaces remain viable since their retail prices are always lower and more flexible than those of different chain shores.

So, it is very likely that, by attempting to stop (prevent) the growth of the retail prices and tariffs in the country (including the use of the administrative pressure on business and the strengthening of the state control of the prices), Akorda and «the Library» are intensifying the protest sentiment in the society. (It is quite possible that they themselves are unaware of that). Particularly, this sentiment is rising in the part of the society that is now the poorest and, therefore, is much more sensitive to the growth of the prices for groceries than to the growth of the prices for utilities.

Obviously, in this case, there arises a question to which the state will have to find an answer:

why the retail prices and tariffs are constantly rising in Kazakhstan and why their growth is never stopped or slowed down without a harsh interreference on the part of the state structures?

The validity of the question can be confirmed by the table we have prepared on the basis of the official data of the Statistics Committee of the Ministry of National Economy.

Price and tariffs index for primary goods and services


Add comment

Your e-mail will not be published. Required fields are marked with *