I can’t afford to pay higher prices for food and services. As the tenge has been devalued and the banking sector has been shown to be weak in Kazakhstan, people are panicking. And when Kazakhstan panics, it buys food products like oil, flour, rice, pasta and vodka. First of all, people are afraid there will be shortages of these goods in the future. Second, people are confused as to whether to hold their savings in dollars (which are expensive now, but might fall in price again) or tenge, which is weakening. Prices for real estate are also dropping from the credit crisis. Therefore staple goods that will always be in demand and can be stored for a long time make a good investment. Many people tell me that they are reminded of the crisis of the 90s, following independence, when people could not receive their salaries in tenge so they were paid in products. Of course as soon as consumers see shortages in flour or oil, they assume someone knows something they don’t. So the panic buying spreads rapidly.
As of yet, I haven’t seen any price increases here in Astana due to the crisis, but honestly prices have been increasing noticeably for years and so crisis-related rises will be hard to distinguish from the usual inflation. Of course, with the falling price of oil (fallen!), we had hoped that prices would go down. I suppose the most we can hope for now is that prices remain stable.
One effect of the crisis that is visible is the number of stores that are closing, and most strikingly, newly opened stores that are already closed. The new shopping mall, Keuren, on the Left Bank for example, officially opened on 16 Dec although many stores had yet to move in. However spaces that were empty 6 weeks ago are still empty. A few stores that were full of goods last weekend are already empty and dark. It seems that people had expected to get credit, but were unable to do so. Or that credit rates increased to the point that entrepreneurs felt it better to pay back the loan early and scrap plans. A few businessmen may also feel that it will be difficult in hard times to attract new business, especially luxury businesses like high fashion clothes or jewelry.
Of course, some businesses seem to be doing well. Vester supermarket in Keuren, I am told, is well-stocked and provides extremely cheap prices. However, a friend who lives on the West Bank says that many of the stores around Vester are closing or low on stock. A beauty supply store across the street is out of business becauseVester is cheaper and because people prefer to buy their beauty supplies and food products in one place. Many of the minimarts can’t raise the cash to restock as they lose business to Vester for the same reasons.
Interestingly though some new luxury businesses are still opening up around town, even as many are failing. A number of small businesses are owned or run by oligarchs or their families, according to rumors. Some clothing stores or home furnishing boutiques are run by the wives of politicians or powerful businessmen. So the thinning of the herd of boutiques might be an indicator that the crisis is reaching many seemingly secure powerbrokers in Kazakhstan. But some oligarchs are still doing well enough to subsidize their wives’ hobbies.
All of this is speculation, but I must say as someone whose salary has not risen in 3 years, while inflation has gone up tremendously, it is a bit of an insult to see Italian furniture being imported for people who can afford it, when I just want reasonable prices for meat and potatoes!
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