The cost of palaw in Ashgabat has increased by 66.12% in October 2021.
The average cost of cooking palaw in Ashgabat was 100.42 Turkmen manat in October 2021, which is 13.79% lower month-on-month compared to September 2021 (116.48 manat) and 66.12% higher year-on-year compared to October 2020 (60.45 manat).
All palaw ingredients except carrots contributed to the yearly inflation of the Palaw Index. The only ingredient price that declined was carrots. The price of carrots decreased by 13% compared to the previous year (October 2020). All other ingredients increased in price: beef (94%), followed by flour (90%), onion (71%), cooking oil (38%), and rice (38%) (Figure 1).
The highest price increase in October 2021 was observed for beef prices. The main reason for price hikes of beef is likely to be the rising price of animal feed, which is mainly imported from abroad and therefore might be affected by exchange rate fluctuations. We can see price increases of international food products as well. According to the Food and Agriculture Organization of the United Nations (FAO), international food prices increased by 31.3% in October year-on-year and meat prices rose by 22.1% compared to last October of 2020.
The average black market exchange rate between January and October of 2020 was 22 manat/dollar and for the same period in 2021, it was 30.5 manat/dollar, which is 38.6% higher. Therefore, there is a positive correlation between black market exchange rates and price increases of grocery products. We can see a trend of manat appreciation against the USD in black market exchange rates in the past two months from 27.5 manat to 22.6 manat from September to October 2021, which might explain the 13.79% decrease of the cost of palaw in month-on-month during that time period.
Sellers of products were hesitant to quickly lower grocery prices. They prefer stable declines in the exchange rate before lowering prices of products. Even without exchange rate fluctuations in Turkmenistan, prices of imported animal feed are rising in other countries, which in return leads to the rise of beef prices in Turkmenistan. A report by Turkmen.news claims that the Turkmen government imposed import restrictions on food products in order to enhance import-substitution policies, which led to the rise of food prices in the country.