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Kazakhs hit hard by rising world food prices

ALMATY: Alma, a working mother who scrapes a living by selling grain and sugar at a bustling market in Kazakhstan, says she cannot afford to buy clothes and other essentials for her family any more.

“All we buy is food, food and food,” she said as she explained to customers why the price of flour had risen overnight. “I don’t know what will happen tomorrow.” Alma, in her thirties, is one of millions of people in Central Asia’s biggest economy whose purchasing power has been devastated by soaring global food prices.

A jump in prices for foodstuffs has hit many poor nations this year and sparked riots in parts of Africa and Asia, but it has also reached unlikely places like Kazakhstan - an oil-rich nation which itself is the world’s fifth largest wheat exporter. Seeking to cash in on booming prices, unregistered traders could be seen outside Almaty’s main bazaar offering low-quality produce for those who cannot afford better: chunks of meat offal covered in dust and soggy vegetables.

“I’m just buying less,” one elderly woman said angrily when asked about rising prices. “And eating less.” Despite state efforts to contain the problem by banning grain exports, prices for key staples such as bread, flour and butter continue to rise, adding to people’s feeling of unease with government policies. Although analysts say there is no immediate risk of riots, a growing sense of uncertainly in Kazakhstan could undermine stability and investor confidence in President Nursultan Nazarbayev’s ability to adapt to a changing economic climate. “People are afraid. They are spending all their money on building up food stocks,” said Alma at the market in Almaty where stalls sell grain, butter, bread, sweets and dried fruit. “Prices are growing every day.” Long the darling of emerging market players impressed with Kazakhstan’s double-digit economic growth, the former Soviet nation has seen its economic fortunes wane over past months as a global credit crunch continued to bite into the economy.

Fears of spiralling food inflation are now threatening to undo the economic gains accumulated through an oil-driven annual economic expansion of about 10 percent since 2000. “Economic growth is likely to fall sharply in 2008 to below 4 percent,” Standard & Poor’s said on Tuesday after cutting its sovereign outlook on Kazakhstan to negative from stable. In a sharp reminder of food shortages and queues for bread that heralded the collapse of the Soviet Union in 1991, people have begun to cut non-food spending and stockpiling foodstuffs in anticipation of further price rises.

Gulya, who sells sweets at the same market in the Kazakh financial capital Almaty, says her sales have dwindled as people spent more money on basic foodstuffs like rice and vegetables. “People just don’t have enough money,” she said as a group of customers struggled to load a 25-kilogram (55 lb) sack of flour onto a cart nearby. The price of wheat flour jumped by over 60 percent last year and rising food prices kept annualised inflation close to the peak of 18.8 percent registered in late 2007. reuters

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