On the Rise

A sign announcing the new bus fare

Since the beginning of the summer there’s been a rumor that the cost per ride on public buses and trams would jump from KZT 50 (UDS 0.33) to KZT 80 (0.53). While the rise is small in absolute terms (20 US cents), it is a 60% increase in what is for many a daily necessity. But week after week nothing changed. Then, last week, plain and unofficial-looking A4 pieces of printer paper sellotaped inside buses announced the long-awaited increase. The change went into effect yesterday, 23 July (although that didn’t stop some opportunistic bus conductors accepting KZT 80 from me late last week, when I thought the fare hike had already gone into effect).

My friends who have been in Almaty longer than I tell me that it wasn’t so long ago that buses cost KZT 40, meaning that the price has doubled in the last half decade. Government statistics estimate national inflation at 8% annually. To the best of my knowledge, the state does not release inflation statistics for individual oblasts or cities, but I would assume that inflation is even higher still in Almaty and Astana – the two cities in which the vast majority of Kazakhstan’s economic wealth and growth thereof appears to be concentrated. I have no way of gauging what the rate in Almaty might be, but I have anecdotal evidence that the rates are frighteningly high.

I buy a loaf of bread about once a week, and have been doing so since I moved to Almaty just shy of a year ago. Kazakhstan’s bread is good, hearty and tasty, especially compared with the British bread I was eating last year. As the secondary breadbasket of the late Soviet Union, quality bread is perhaps unsurprising. But it is therefore surprising that the cost of my favorite type of bread (borodinski, a black rye bread popular throughout the former USSR) went from KZT 68 to 92 – a 35% increase.

Last winter, the price of one portion of good döner kebab (in Kazakhstan, this means shaved lamb meat, pickles, tomatoes, onions, soggy fries, a red sauce and a white sauce in a wrap and briefly grilled on a George Forman-style “grill”) rose 25% to KZT 500. The proprietors of my favorite döner stand told me that this reflected increases in the cost of meat. Before the 1990s, Kazakhstan was the leading exporter of meat to other Soviet Republics, but this industry collapsed along with the economy in the 1990s and has never fully recovered. If I recall correctly, heads of livestock only recovered their 1980s levels in the early 2000s – which obviously means it is lagging behind population and demand growth as carnivorous Kazakhs become wealthy and larger consumers of meat.

Then, just a couple weeks ago, a businessman with years of experience in Central Asia pointed out to me that vegetable prices are also shooting up. The reason: Kazakhstan used to import veggies from Uzbekistan (as well as China), but the Uzbek government has (supposedly) closed down its greenhouses in order to reroute the power and gas resources used by Uzbek winter and off-season farmers to Chinese consumers. Kazakhstan is compensating by expanding its own greenhouse agriculture practices, but the higher cost of production in Kazakhstan and the lag in transition mean that increased prices are unavoidable.

There are two stories being told here; the first is about food security, which is a huge issue in Central Asia, but one about which maybe I’ll write a chapter in my hypothetical future book. The second is about inflation and Kazakhstan’s financial security. Inflation is itself destabilizing: it causes popular low-level discontent, exaggerates economic inequalities in societies, and may weaken Kazakhstan’s position relative to its looming neighbors, Russia and China. Since the early 2000s, Kazakhstan has done a good job of painting itself as the rock, the island of stability, in a volatile region. Inflation hasn’t yet reached levels where I need to get hysterical about the situation, but it does give me pause.

I am also concerned about inflation in Kazakhstan because of what I presume to be the driving source of the upward pressure: oil and mining. Now, I’m no economist, and I run the risk of misunderstanding causes and effects, but I believe that consumer goods inflation reflects the growing pool of money sloshing around Almaty. The political impact of resource wealth like that possessed by Kazakhstan and concentrated in the hands of narrow segment of society (as it is here) are well-studied, and I worry that Kazakhstan might not follow the Norwegian example, as it should, and instead become another petro-state (if it isn’t already). Certainly, there is already a degree of corruption, inefficiency and imbalance in Kazakhstan, but it could get much worse. So far, Kazakhstan seems like it has been reasonably well managed, and I hope it continues to be. Does the extra 20 cents I paid for my bus ride today bode ill?

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1 comment
  1. Becca said:

    Everyone freaked out about the Shymkent tariff hike (I think it was to 50KZT, from 35KZT) and wrote petitions against it. I never saw it go into effect despite several months of hoopla…wonder if it has now.

    The blog continues to be wonderful reading and I learn a lot despite being very familiar with the country. You should most definitely write and publish that book (sooner rather than later, as things progress quickly!)! You have plenty of great material here.

    А когда New Haven? 🙂

    b

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