BAKU, Azerbaijan, May 16
By Ilkin Seyfaddini - Trend:
The Central Bank of Uzbekistan has published a study on the impact of inflation on population groups with different income, Trend reports with reference to the bank.
The survey was conducted from 10 to 15 February 2020, and covered 880 persons, including, among others, 60 respondents from each region and Karakalpakstan Autonomous Republic as well as 80 respondents from Tashkent and Tashkent region.
Of those surveyed, 70 percent are urban residents, while 30 percent are rural residents.
The survey data showed that a large share of respondents-households (38.7 percent) belong to the group with income of 2-4 million soum ($196.9 – $393.9) per month.
In comparison with higher income groups, the households with lower income spend most of their expenses on food products, while less on non-food products and services (transport, health, education and others) .
Higher inflation rates are observed in high income regions such as Tashkent, Tashkent and Bukhara regions, the residents of which account for 30 percent of the country total population.
The average inflation rate in the country was higher than in regions with relatively low incomes including Karakalpakstan and Fergana, Namangan and Surkhandarya provinces. Residents of these regions account for 27 percent of the total population.
Low-income respondents in most regions experienced higher inflation rates. Households with incomes in the range of from 1 million to 4 million soum (between $98.4 and $393.9) experienced inflation rate by 0.6-1.4 percent higher than households with incomes of six million soum ($590.9) and more.
As lower income groups spend more of their expenditures on food, they experienced higher inflation due to higher food inflation of 18.6 percent in 2019. They have also benefited less from the slowdown in non-food prices.
"Thus, it can be argued that low-income households living in high-income regions tend to experience the highest increases in their living costs," the report said.
As the proportion of food in the consumer pack of households with relatively low incomes is higher, these households were more likely to experience food inflation caused by seasonal price fluctuations.
However, price increases due to the devaluation of the exchange rate in August 2019 were more strongly felt by higher income households, as they spend more on non-food items and services. Overall, the difference in perceived inflation for the highest and lowest income groups is about 1.5 percent.
Meat products (33 percent), fruits and vegetables (19.6 percent), bread products (12.8 percent) and dairy products (7 percent) account for the largest share of household expenditures on food.
The increase in total expenditures was accompanied by a 21.9 percent increase in total income in 2019. On average, the level of income exceeded the level of expenditures for groups with higher income (except for households with income up to three million soum that is $295.4), which allows saving part of their income.
The Central Bank following short-term measures:
Providing markets with vital consumer goods and preventing price hikes by establishing supply chains and stimulating supply;
Financial support and important consumer products for the disabled, including single mothers and disabled persons;
Encouraging entrepreneurs to create new jobs and conditions with improved skills for those who are able to work without work or in difficult living conditions due to low incomes;
Improving the efficiency of land use in rural areas through agrarian reform.
Long-term measures include:
Establishment of a "social elevator" institute by providing a quota of places for the poor in higher education institutions at the expense of the state and international financial institutions;
Providing affordable housing and public transport, improving financial education and financial literacy of the population;
Increased funding and channeling of children's knowledge to modern professions such as information technology, engineering and biomedicine;
Increasing the number of high schools for children from low-income families and providing quality secondary education for children.
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