Inflation in Kyrgyzstan

A short history of inflation in Kyrgyzstan

The Food and Fuel Spike (2007 to 2008)

Kyrgyz inflation peaked at 32.4% in the year to July 2008. It is a small landlocked economy that imports most of its fuel and much of its wheat, and the global food and energy spike of that year passed through with little to soften it; the country also depends heavily on remittances from workers in Russia and Kazakhstan, which links its income to its neighbours' economic fortunes.

The same exposure shows up repeatedly. Kyrgyz inflation moves with world grain prices, with the som's value against the rouble and the dollar, and with harvests in the region, rather than with domestic demand, which makes it volatile in a way a larger and more diversified economy's would not be.

Post-Covid Inflation (2021 to 2023)

In Kyrgyzstan, prices rose fastest in February 2023, at 16.2%. The causes of the post-Covid inflation were global in nature, beginning with the lockdowns: factories and ports closed and the shipping between them fell out of sequence, so goods took longer to make and longer to arrive. Governments had spent heavily supporting household incomes through those closures, so when restrictions lifted there was money waiting to be spent and not enough on the shelves to spend it on. Then in February 2022 Russia invaded Ukraine, disrupting two of the world's largest suppliers of wheat, fertiliser, oil and gas at once, and the cost of everything grown, heated or transported rose with them.

Because the causes were shared, so was the timing: most countries peaked within a few months of one another in late 2022. The major inflation events covers this episode and the others in more detail.