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Kazakhstan will soon feel the rising cost of living: expert 30 августа 2014, 02:15

Fuel prices have grown in Kazakhstan, and they will push the prices of other goods upwards.
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©Yaroslav Radlovsky ©Yaroslav Radlovsky

Prices on gasoline spiked last week in Kazakhstan. The deficit of gasoline and diesel in the country still remains, and drivers in some Kazakh cities have to stand in lines stretching for kilometres. Uralsk in oil-producing Western Kazakhstan Oblast bordering on Russia is one of such cities.

Commenting on the situation Head of the Independent Union of Motorists emphasised that the recent increase in the fuel prices did nothing to resolve the structural deficit problem, Tengrinews reports. Kazakhstan producers only 60% of its fuel and imports the remaining 40%.

Besides, he called the gasoline deficit-driven frenzy an artificial one, and referred to the combination of factors that caused it for evidence. It is harvesting season and the time when the "demand for fuel is highest, but the refineries closed down for repairs exactly at this particular time. The devaluation (of the tenge in February by nearly 20%) pushed the cost of fuel up by these same 20%. And they (businessmen) have been trying to selling as little gasoline at old prices as possible," he said.

But how are fuel prices to affect the overall economic situation in Kazakhstan?

Advisor to the Chairman of the National Chamber of Entrepreneurs Timur Nazkhanov believes that Kazakhstanis will start feeling the rise in the cost of living in September. The fuel prices will push all the other prices up and the rise will be especially justified for processing and production enterprises, construction companies, trade and transport firm, and even bus fairs. "Even if there are no real grounds (to increase the prices), they will try to do it anyway. Our businesses are not very transparent and they don't report all their expenses," he said.

All this will be happening against the backdrop of sanctions imposed by the West on Russia for waging war in Ukraine. And since Russia is Kazakhstan's main trade partner, the sanctions will have a negative impact on Kazakhstan's economic situation further worsening the impart of the fuel prices hikes on the standard of living. "We are importing more and more of our food from abroad, including from Russia. The prices will be higher in September then they are now," he said, but added that salaries also had to grow, and that most likely the government will use its administrative leverages to prevent unfair exploitation of the unfavourable situation by dishonest businessmen wanting to cash in on the price rise.

However, from what General Secretary of the Union of International Road Haulage in Kazakhstan Theodore Kaplan had to say, the fuel prices increase is not supposed to have much real influence on the end prices.

He said that his organization was mostly concerned about the cost and availability of diesel fuel. "We are working on diesel. Here in Kazakhstan we have the cheapest diesel in the Customs Union (of Kazakhstan, Russia and Belarus), not to mention the European Union. The rise is unpleasant, but it is not critical. Our transportation costs are among the lowest. Freight tariffs have remained almost unchanged over the past decade: efficiency has been improving, empty runs have been reducing and competition has been growing," Kaplan said.
Reporting by Alisher Akhmetov, writing by Dinara Urazova, editing by Tatyana Kuzmina

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