Cost of bread up again in Azerbaijan, opposition proposes reduction of VAT
Cost of bread rises again in Azerbaijan
Today in Azerbaijan bread is 7-9% more expensive. Manufacturers have set a price ceiling for the most consumed types of bread. According to them, the reason for the higher cost is the war in Ukraine and uncertainty in the global economy. Meanwhile, the opposition has suggested to the government to lower the VAT rate to 2% in order to ease the burden on the population. On social networks, users are skeptical about the wording of price increases in pro-government publications.
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On August 19, 2022, the cost of bread rose in Azerbaijan for the second time this year. In January it went up 30%, and today has gone up another 7-9%, depending on type and weight.
Manufacturers of flour and bread products made a joint report about the rise in cost.
The report notes that the price hike is due to “the consequences of the COVID-19 pandemic and uncertainty in the global economy, constant pressure on supply chains, rising logistics costs, the creation of excess reserves by many countries and various protectionist measures of wheat-producing countries to protect the domestic market, and rising prices for wheat in world markets.
“Due to political and military conflicts in countries which are the main producers of food wheat, there are serious price and supply risks on world markets, as well as restrictions on world trade in this product. Uncertainty caused by conflicts, a sharp increase in logistics costs for wheat, and export restrictions and export bans imposed by other producing countries, have led to a reduction in supply in the world market and higher prices,” the manufacturers’ report reads.
In the last part of their report they give the latest prices of flour and bread:
“Taking into account current import prices (the average monthly import price for food wheat over the past three months being $365) and processing costs, upper price limits have been determined: the upper price limit for a 50kg bag of flour in Baku is 40.7 manats [about $24] .
“According to the latest prices for flour, the retail price of 500g traditional (round) bread will be 55 qepiks [about 32 cents], 600g bread 65 qepiks [about 38 cents], and 650g bread 70 qepiks [about 41 cents].”
Opposition proposes reduction of VAT
The chairman of the opposition Republican Alternative Party, Ilgar Mammadov, has proposed lowering the VAT (value-added tax) rate from the current 18% to 2%.
“Approximately 80% of the country’s population make their purchases in chain stores. All of them are VAT payers – so uncle Abdul and aunt Tyukyazban pay 59 manats [about $35] when buying groceries worth 50 manats [about $29] in a store.
“Our party tells the government that there is a surplus in the state budget, revenues from the sale of oil and gas, given to us by God, are growing, and the positive balance in foreign trade is $15 billion. And therefore it would be worth reducing the VAT.
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“So let’s let uncle Abdul and aunt Tyukyazban not pay 59 manats, but 51 manats when buying products for 50 manats. Thus, 8 manats [about $5] will remain in their pocket, and with this money they will pay for utilities. In other words, this money will still go to the state budget; but the population, suffering from rising prices, will improve its situation a little.
Ilgar Mammadov proposes this, but the government is silent. Reducing VAT on the sale of food and medicine is more effective than any social assistance,” Natiq Jafarli, one of the leaders of the “republican alternative,” explained.
It should be noted that by decision of the Cabinet of Ministers of Azerbaijan, the import and sale of flour and bread are exempted from VAT until 2024.
“Not growth, but the definition of the upper limit”
Almost all pro-government media in Azerbaijan have published news about the rising cost of bread without using the words “growth” or “rising”. Most of them were content with the wording “an upper price limit has been determined.”
This caused a storm of ironic commentary in the Azerbaijani segment of social networks. Here are just a few typical comments:
“Bread has not risen in cost today, it was just cheaper yesterday.”
“What is a price cap? Are they preparing to return to the era of collective farms and state farms? Does the state set a price limit on the market?“
“Our prices never rise, they just change. But only in one direction.“
Cost of bread rises again in Azerbaijan