January 2023: Palaw Index drops by 8.8%.
Onion prices saw a staggering 164% increase amid extreme cold weather.
The average cost of cooking palaw in Ashgabat was 78.2 Turkmen manat in January 2023, which is 1.5% higher month-on-month (MoM) compared to the prices observed in December 2022 (77.1 manat) and 8.8% cheaper year-on-year (YoY) compared to the similar period last year in January 2022 (85.8 manat). The data from January 2023 marks the continuation of the downward trend in palaw prices started in April 2022.
Although Palaw Index as a whole decreased by 8.8% YoY in January 2023, some palaw ingredients saw price hikes due to unexpected weather events occurring throughout the whole month. Prices of beef dropped (-27.7%), wheat flour (-26.3%) and sunflower oil saw a (-0.4%) decrease in prices. Onion prices saw a whopping 163.8% increase, while carrots (17.4%) and rice prices increased by (16.4%) in price. Despite the high percentage increases in onion prices, its overall impact on the Palaw Index was low due to its small price. While rice prices have been going up for months since May 2022, the price increase in carrots occurred for the first time since September 2021 on YoY, and onion prices increased only once in the last 10 months based on YoY (see Figure 1).
Huge spike in onion prices
Onion prices rose from 4.7 manat in January 2022 to 12.4 manat in January 2023, which is a 163.8% increase. Onion prices never reached these highs since Palaw Index started gathering onion prices in January 2020. The highest onion price in these 3 years was observed in April 2021 at 8.5 manat, while prices averaging at 4.8 manat between 2020 and 2022.
Such a sudden and big price hike has likely occurred due to the unexpected cold month in the country in January 2023 reaching temperatures below the historic norms. Turkmenistan experienced abnormally cold weather throughout the whole of January beating multiple records of the past 100 years. The coldest temperature in the country in January 2023 was observed in Serhetabat, reaching -27 degrees on January 13, which became the second coldest temperature in this city since they started observing it in 1905 (Meteojournal). In Turkmenabat, the temperature at one point reached -25.4 degrees on January 13, which became the coldest temperature since 1894, the year in which observations began in this city.
As this cold weather came unexpectedly, farmers who sow crops for the winter season could not fully pick their harvest. The most nonresilient crops to cold such as onions were frozen and got damaged in January. Less supply and sudden panic associated with frozen crops led onion prices to go up. Farmers who lost their crops due to freezing temperatures had to increase the price of their current products to compensate for their loss. While price hikes in onions and carrots occurred due to the cold weather, rice prices on the other hand, have been going up since May 2022 amid water shortages in the country.
Correlation between palaw prices and the black market rate
We notice a downward trend in palaw prices from April 2022 to this day which correlates with the value of USD in the black-market exchange rate. The Palaw Index dropped by 8.8% in January 2023 compared to a similar period of last year, while the black-market rate declined by 6.3% at the same time. You can see the evolution of Palaw Index prices together with the USD exchange rate from January 2022 to January 2023in Figure 3.
Prices of ingredients in the Palaw Index are collected for 1 kg of onion, carrot, beef, rice, flour and 1 liter of cooking oil. Our methodology uses a recipe of palaw for a family of four: 0.3 liters of cooking oil, 0.5 kg of onion, 1 kg of carrots, 0.6 kg of beef, 1 kg of rice, and 0.5 kg of flour. Please click here to learn more about the methodology of the Palaw Index.