JAN. 6 2016, ALMATY (The Conway Bulletin) — Bread prices are beginning to rise in Kazakhstan after the government cut flour subsidies, people working in the bread-making sector told The Bulletin.
The Kazakh government ended its subsidies for flour on Jan. 1, a move it flagged up in November as part of an overhaul of government spending designed to counter an economic slowdown. It has defended dropping subsidies as fair because it means that
the money saved can be re-focused on benefits for poorer sections of society. Asylzhan Mamytbekov, minister for agriculture, has said that flour subsidies were costing the government 9b tenge a year ($26m).
But the impact of the subsidy cut on bread-makers is already being felt.
In Almaty, Yerbol Beisembayev was going about his business buying bread from factories and re-selling loaves to shops. He said that a couple of factories had already closed because the cut in flour subsidies had made them unprofitable.
“Now everything will depend on who will get the best price for the flour,” he said. “The government has allowed bread (prices) to free float, just like the tenge.”
In August, the Central Bank ditched the tenge’s peg to the US dollar. This sent the value of the tenge crashing by around 40%.
It appears that, for now, bread producers are preferring to soak up the extra cost of the flour rather than pass it on to consumers. Most shops selling bread in Almaty said there had been a small price rise of 5 tenge a loaf — roughly 8%. This below the doubling of prices that analysts had predicted once flour subsidies were cut.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 262, published on Jan. 8 2016)