Rising food prices are not only linked to the VAT increase — Ministry of National Economy of Kazakhstan

Kazakhstan’s Minister of National Economy Serik Zhumangarin commented on the rise in food prices observed after the increase in the VAT rate. Speaking to journalists on the sidelines of the Mazhilis, he noted that the rise in food prices is caused by a number of factors, not only tax changes, LS reports.

According to the minister, Kazakhstan does not fully supply itself with all types of food products. For most socially significant food products, the level of self-sufficiency ranges from 70% to 90%. At the same time, some products on the domestic market are imported, while global food prices are currently rising worldwide.

Zhumangarin also cited FAO index data, according to which the indicator for sunflower oil reached 124 last year. In addition, global prices for dairy products and meat have increased significantly.

According to him, the rise in global prices increases demand for Kazakh products in export markets. In such a situation, farmers prefer to sell their products abroad, where prices are higher. When the government asks them to supply more products to the domestic market, producers may respond by raising prices internally. It is impossible to prohibit this practice, as it could reduce the attractiveness of the sector.

The minister also reported that in January food inflation in Kazakhstan amounted to 0.8%, while in Russia it reached 2%. Since a significant share of food products is imported from Russia, Kazakhstan experiences the effect of so-called imported inflation.

Zhumangarin emphasized that food price growth cannot be explained solely by the 4% VAT increase. According to him, the situation is shaped by a complex set of factors and each case requires separate analysis.

As one of the key solutions, the minister named the development of domestic production and increasing the supply of locally produced goods to the domestic market, which the government is currently working on.