Uzbekistan: Utility Price Hikes Belie Official Inflation Claims
In the second major utility tariff increase in six months, Uzbeks will soon begin paying about 10 percent more for water, gas and electricity. Gasoline, when consumers can get it, soared in price repeatedly last year and another 20 percent this January. Yet officially, inflation somehow manages to stay under 7 percent.
Uzbekneftegaz, the national oil and gas company, said this week that according to a March 17 Finance Ministry resolution, the price of natural gas would rise 8.9 percent on April 1. The price last rose 8.5 percent in October 2013.
The state-run electricity provider, Uzbekenergo, announced on March 18 that its tariffs would rise 9.5 percent on April 1. Electricity prices climbed 7 percent last October.
On March 13 the state-run Suvsoz water-supply company said that in Tashkent, Uzbekistan’s capital, water prices would jump between 9.8 and 10.5 percent above rates set last October. Suvsoz said the hike was "due to an increase in the prices of electricity and other resources."
The Gazeta.uz news website reported on March 14 that tariffs for hot water and heating would climb 11.7 percent in Tashkent next month because of "a growth in prices of energy sources and materials."
These regular price hikes might be explained by the cash-strapped government’s fear of suddenly dropping utility subsidies—a Soviet holdover that is expensive, yet painful to stop and that, leaders fear, could set off unrest. To be sure, prices remain low by global standards. Even after the most recent increases, natural gas sells domestically for less than $75 per thousand cubic meters (tcm). Uzbekistan sells its natural gas to neighboring Kyrgyzstan for $290 per tcm.
But the constant increases do drive up the price of almost everything. That's called inflation, which President Islam Karimov claimed in January stood last year at only 6.8 percent.
Of course, making sense of Uzbek statistics – which seem to err on the side of hope, rather than reality – is often a fruitless effort. Tashkent does not publish itemized figures to allow researchers to independently calculate economic trends. Nor does it explain the methodologies it uses for its calculations. Its statisticians seem to live in a bubble.
So we’re left guessing about the real level of inflation, which most Tashkent residents will tell you is a lot higher than Karimov’s 6.8 percent.
One place reality and hope don’t agree is in Uzbekistan’s currency markets, fostering a healthy – and growing – spread between official and black market rates for the Uzbek sum.
The 10-percent drop in the value of Russian ruble against the dollar so far this year has shaken regional currencies such as the Kyrgyz som and Kazakh tenge, and driven up the costs of imports in those countries. But the Uzbek sum has fallen less than 5 percent officially and 7 percent on the black market against the dollar. The government’s jealous grip on statistics has its benefits—if you’re sitting on a pile of sums.