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Price Controls for Tajik Capital

Attempts by the Dushanbe authorities to control inflation by fixing the cost of basic goods will not work, say analysts.
By Ravshan Abdullaev
A decision by the authorities in the Tajik capital Dushanbe to slash the cost of basic footstuffs in an attempt to control soaring prices will not provide an effective or lasting solution to the problem, say analysts.

In recent months, the cost of food products has risen dramatically in Tajikistan, causing alarm to the authorities in a country where much of the food consumed is imported and the average monthly salary is just 148 somoni, or 45 US dollars.

Tajik president Imomali Rahmon highlighted the problem at a recent government session. In response to the rising prices, Dushanbe’s mayor Mahmadsaid Ubaydullaev ordered price cuts on basic goods and a special commission is inspecting local markets to ensure that vendors comply.

But analysts say this response has not resolved the underlying inflation problem, and has simply forced traders to find ways of short-changing their customers to cut their own losses.

Spiralling prices in Tajikistan mean that people spend much of their wages on food.

Even fruit and vegetables, which are grown locally and are traditionally cheap and plentiful in Tajikistan, have now become expensive. Last year, a large melon would have cost around four somoni – about a dollar – but now costs two and a half times that amount.

Town dwellers are worse affected than people in rural areas, who can grow much of their own food.

In Dushanbe, the price of beef shot up from 12 to 15 somoni (3.5 to 4.4 dollars) a kilogram over the course of July, while flour went from 55 somoni to 75 somoni a sack (from 16 to 22 dollars).

However, following the price cuts at the start of August, beef is officially back at 12 somoni a kilo and flour has gone down slightly to 70 somoni a sack.

While other regions of Tajikistan which have also seen price rises have not yet followed the Dushanbe’s lead by fixing prices, they are likely to do so if restrictions continue in the capital for any length of time.

Bahriddin Valiev, head of the department of trade in the mayor’s administration, told IWPR that price-capping had increased people’s purchasing power.

However, as often happens with price cuts, the effect has been to reduce availability. In the few first days following the enforced reductions, there was no fresh beef to be found at markets in Dushanbe. When stocks were replenished, the meat was of poorer quality.

A market trader who gave his first name as Karim told IWPR that since prices were lowered, he had had to skimp on quality, and now has fewer customers as a result.

“To make a profit, I have to chop the meat so that there are more bones in it. Otherwise, one can’t survive,” he said. “Prices fell only for retailers - wholesalers are still selling at high prices.”

Fazliddin Umarov, an engineer living in the capital, said he initially welcomed the news that the cost of meat was to go down, but was disappointed at the result.

“It became cheaper but the quality is very poor. It’s fit only for dogs,” he said. “Previously, meat was expensive but the quality was high and one could choose what one wanted. I’d like it to cost more but be better quality.”

Zinaida Gavrilova, a Dushanbe pensioner, can seldom afford to buy meat on a pension of just 35 somoni, ten dollars, a month, and said that since prices were slashed, she could no longer find it on sale.

Customers can quietly pay a premium if they want good-quality foodstuffs. In the case of beef, the informal price is 15 somoni a kilo – three somoni higher than the price fixed by the authorities. Dushanbe residents say the same applies to other food items.

The poor quality of beef has prompted Umar to buy chicken instead.

“I think it will only get worse. Prices have been curbed, but things will get worse as the Ramadan period approaches, you’ll see,” he said.

Food prices traditionally increase in Tajikistan ahead of the Muslim fasting month of Ramadan, which this year begins on September 13. Prices remain high through the month as people observing the fast by day buy in food for evening feasts and especially the celebrations that mark the end of the period.

Shokirjon Hakimov, deputy head of the Social Democratic Party, said the decision to fix prices reflects a genuine desire on the part of the authorities to improve people’s standard of living. But he warned that decisions imposed by government run contrary to the rules of market economics, where prices are set by demand and supply.

Economist Rustam Babajanov took a similar view, saying that governments in more advanced economies use more sophisticated mechanisms to influence prices such as tax rates. He said this did not happen in Tajikistan because neither officials nor businesspeople had the right level of “market awareness”.

Another economist, Hojimuhammad Umarov, attributes recent inflationary trends to external factors such as rising international prices of wheat and petroleum products, which are imported mainly from Russia and Kazakhstan.

He warns that if inflation goes unchecked, people may take to the streets to vent their frustration.

At the same time, he does not see the price-capping policy as viable beyond a few months, and as long as it is in effect, availability and quality will suffer.

“Look at the quality - even now, they’re slaughtering only the old cattle or oxen used for ploughing. The meat tastes bad,” he said. “What next? They might start selling donkey meat under the guise of beef.”

Ravshan Abdullaev and Nafisa Pisarejeva are IWPR contributors in Tajikistan.

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