Everywhere But Home

News and musings from wherever my crazy life takes me. My body may be back in Illinois, but at least for now, my mind is still in Mongolia.

Inflation

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This is not the first foreign country in which I’ve lived, but it is the first in which things like inflation have had a directly observable impact on my life. the only price I’m used to keeping an eye on is that of gasoline – and having grown up in Chicago and gone to school in rural Ohio, I found that even that usually had more to do with geography than the fluctuating price of oil.

Things are different here. I have no idea how much a gallon of gas costs in Erdenet; I’d have to convert from liters to gallons as well as tugriks to dollars, and since I don’t drive here, I’ve never bothered to note the price, much less do the math. What I have noticed, though, is the rising cost of food. A kilo of potatoes, carrots, beets, or turnips cost 800 ₮ last September; cabbage, onions and garlic, 1000. Since then, potatoes and carrots have gone up to 1000; beets and turnips are 1300, and onions 1500. That the price of onions is still dirt cheap (less than a fifty cents a pound) is beside the point. The point is that onions now cost fifty percent more than they did just nine months ago.

It’s not just root vegetables, either. Our favorite wine (so designated because it’s the only stuff under 10,000 a bottle that even approaches “palatable”) recently jumped from 6,800 to 8,600 at the wine shop. Maybe they thought no one would notice if they just switched the numbers around. And while I don’t frequent any one restaurant enough to point to any particular spikes in prices since my arrival, Lauren informs me that she’s noticed them at at least three of our favorite restaurants. The menus aren’t much help in identifying how recently prices have jumped, as the the orange stickers that mark where a price has been covered and rewritten are so widespread I no longer note their presence.

And restaurant owners have to worry about more than just the rising ingredient prices when trying to meat their increasing overhead costs. Our friend Marco (of the fabulous pizza) complains that although his two-year lease stipulated a fixed rent cost for both years, the landlord has since demanded more money for the second year. In the States, you could contest the violation of such a contract, but so far as I know, the  legal process to do so just doesn’t exist here.

People respond to the problem in a number of ways. When a friend of mine wanted to buy a converter for her Mac, she was perplexed b the request that she pay in cash, in dollars. “Wouldn’t you rather have the money in tugriks, so that you can actually spend it?” she asked. No, she was told; he wanted it in USD. She was confused by this, but he had what she needed, so she went to the bank and exchanged some of the local currency for dollars and forked them over.

She later learned that this man acquires US currency whenever he can, squirreling it all away somewhere. This struck most of the Americans to whom she related the story as surprising and impractical, but given Mongolia’s turbulent economic history, his actions are certainly not without reason.

Mongolia was  a Soviet puppet state for the better part of the 20th century, and the Soviets were loathe to share their newfound source of lumber and minerals with other trading partners. Nor were they particularly inclined to share the industries they established with the locals; it was the Soviets who ran the mines and lumber mills and factories. When the Soviet Union collapsed, it took something like 80% of the Mongolian economy with it, plunging the country into a recession far deeper than the American Great Depression. Livestock outnumber people in this country by a ration of nearly 30 to 1, so the population never starved – but people had precious little besides their animals. Jobs disappeared. The value of the currency plummeted. Factories were stripped, their machines melted down and sold for parts because Mongolians had never learned how to use them. These abandoned shells are still scattered across the country; while the soums in which they were built need the income they could provide, they often lack the money or expertise to refurnish and run them.

Mind you, most of this is hearsay history. Wikipedia goes on for pages about Genghis Khan’s [sic] empire and the Khalkha people but devotes a scant paragraph to events after the country’s democratization. There is a page on the economic history of the People’s Republic of Mongolia – but like the People’s Republic itself, it ends at 1990. I found exactly one sentence mentioning the existence of a Mongolian depression, and it did not include details. So I cannot give you exact facts and figures, because I don’t have them. They’re out there somewhere, I’m sure, but since they’re  in either books I don’t have or a language I don’t speak, that “somewhere” is not one I can access.

Even so, people and places speak for themselves. I’ve seen the now-defunct buildings in Khyelganat and Tonsontsengel. I’ve heard the stories from people who remember when 1500 tugriks was enough to furnish a ger instead of buy a kilo of onions or half a cup of coffee. Some of them were lucky or far-sighted enough to pull their money from the banks and put it all into furniture and other goods, but others awoke one day to find their life savings worth less than a few days’ worth of groceries.

They used to have coins for denominations less than 1 tugrik. Now 1000 tugs (the blue bill) are worth about 70 cents.

They used to have coins for denominations less than 1 tugrik. Now 1000 tugs (the blue bill) are worth about 70 cents.

Hoarding American currency is, I suppose, the same sort of act. It’s a guarantee that even if the economy bottoms out again, the hoarder will still have something of value. The mining industry boom has done a lot to get Mongolia’s economy going again, but as the 10% inflation rate and 30% unemployment rates show, it’s got a long way yet to go. Under those circumstances, I’d want some sort of a guarantee too.

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Author: everywherebuthome

Linguist. Fulbright English Teaching Assistant. Expat in Mongolia. Writer. Scout, dancer, gymnast, equestrienne.

4 thoughts on “Inflation

  1. It amazes me that there is no information about Mongolia, and I’m so glad to have found your blog so that I can learn at least a little about a country I had no image of. I don’t know whether it is the same there but here it seems like it’s the price of cheap food that goes up by the biggest margins first – the value ranges double in price overnight whilst the luxury items go up by a few pence. But maybe it is different when what is really happening is the value of the money itself is plummeting.

  2. Wow, I had no idea it was so unstable over there! Russia seems like economic paradise in comparison (though I do put a lot of my money into dollars just to be safe).

    Do you know how salaries have adjusted to this trend?

    • I’m not sure. I’m not a Mongolian employee – I have a US grant from the State Department, so I get paid in USD. Most of my friends here are Peace Corps Volunteers, and they get paid in what my father would call “spit and cereal.” They have to fill out an expenses report every year to keep up with inflation, but because it’s once a year, any increase in their salary is essentially calibrated based on the previous year’s prices rather than what they will be by the end of that year. PCVs get a pretty bum deal in that regard. I’m not sure how it works for Mongolians.

      • Yeah, I wasn’t really thinking about those kind of situations — if you’re getting comped by the US government, I’m sure they’re doing that. I’m more interested in the Mongolian side. Hmmm interesting!

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