Uzbekistan sees inflation surge

People queue to buy bread in Bukhara; photo: uznews.net
On 1st October, the government of Uzbekistan increased bread prices and the tariffs for gas, electricity, heating and hot water and for people on low incomes.

The price of a basic loaf of bread was increased by 25%. Gas prices have gone up by 20%, electricity prices by 9%, hot water and heating by 6% and mains water by 7%. Prices were last increased on 1 April this year.

The Uzmetronom.com website is also reporting that bottled gas prices have increased by 80% in the last few weeks, which is affecting those living in villages and outlying areas where there is no mains gas. The average monthly wage is the equivalent of around US$70.00 the article claims, and gas is now selling at around US$10.50 per canister.

Wages for employees of state-funded institutions and organisations were increased by 15% in August by presidential decree. Pensions, living allowances and social security benefits have also been increased.

The minimum monthly wage in Uzbekistan now stands at 57,200 sums (US$22.8 at unofficial market rates). The minimum wage is used as the basis for calculating taxes and fines for minor offences so these will be increased accordingly.

The Uzbek government states that annual inflation in the country remains in single figures. On 21 January this year, Islam Karimov told a meeting of the Cabinet of Ministers that inflation did not exceed 7.3% in 2010 compared to 7.4% in 2009, and predicted that in 2011, it would stay in the range of 7%-9%.

In April 2001, Uzbekistan’s finance minister, Rustam Azimov, told an international conference in Tashkent that the government was adopting strict monetary policies ensure that inflation went no higher than 7-8% and that the people of Uzbekistan would be 22-24% better off each year.

On 8 August, the ministry of economics and statistics announced that inflation in the first half of 2011 was 3.6%, in line with President Karimov’s indications.

By 1 October, one dollar was worth 2,500-2,520 sums on Uzbekistan’s black market. At the beginning of the year the rate was 2,300-2,330 sums per dollar, indicating that the Uzbek national currency has decreased in value.

Although it is too early to produce accurate inflation figures for last year, according to Fergananews.com, inflation for 2010 based on a basket of 52 staple food items, reached 41.37%. Fares on public transport went up by 25% in that year, and prices for communal services by 28.25%.

So although the minimum wage in 2010 went up by 32% and pensions by 30.3%, these increases were eclipsed by the inflation for essential goods, and it seems likely that many people will be worse off as a result.

Uznews.net