In recent years, Mongolia has experienced significant shifts in its economic landscape, particularly when it comes to the cost of living. As we delve into the data for 2024, one fact stands out: median real wages have increased 50% since 2014. This striking statistic sets the stage for a closer look at how life in Mongolia has changed over the past decade.

Rising Prices Across the Board¶

Since 2011, Mongolia has seen a substantial increase in prices for both food and non-food items. This trend has reshaped the spending habits of Mongolian families and individuals alike.

One of the most notable changes has been in the price of meat, a staple in the Mongolian diet. Beef, in particular, has seen a dramatic price hike. In 2011, a kilogram of beef without bones cost around 5,000 MNT. Fast forward to 2024, and that same kilogram now sets you back 21,000 MNT – a 4x increase in just over a decade.

It's not just food prices that have been on the rise. Non-food items and services have also seen significant increases. A telling indicator of this trend is the cost of haircuts. While we can't use this single data point to definitively prove that all non-food prices have increased by a large amount, it does provide a glimpse into the overall trend of rising service costs.

Interestingly, not all prices have skyrocketed. Fuel prices, in particular, have shown more modest increases, rising by less than double over the period. This relative stability in fuel costs serves as a strong motivator for the economy, helping to keep transportation and logistics costs in check. 

Cigarette prices have more than doubled. About 25% of Mongolian adults consume cigarettes (45% of males). Cigarettes have increased in price far lower than inflation, making them cheaper in real prices than in 2011. It might make sense to increase taxes on these harmful products to keep up with inflation, while using the extra tax money to support disease prevention programs.

Shifting Expenditure Patterns¶

Perhaps one of the most striking changes in Mongolia's cost of living landscape is the shift in how families allocate their income between food and non-food and services expenses.

Back in 1997, the split was roughly equal – families spent about half their income on food and half on non-food items and services. Fast forward to 2023, and we see a dramatic shift. Now, more than 70% of a family's income goes towards non-food and service items, while food expenses account for only about 20% of the budget.

This shift reflects not only changing prices but also evolving lifestyles and priorities among Mongolian households. As the country continues to develop and urbanize, families are allocating more of their budget to housing, education, healthcare, and other non-food expenses.

Wage Growth: A Silver Lining¶

While rising prices might paint a challenging picture, there's a significant positive trend to consider: wage growth. From 2014 to 2023, real median wages in Mongolia increased by an impressive 50%.

Most of this increase has taken place since 2022. Monthly average wage data in 2024 tells me that real median wages will rise significantly in 2024.

It's important to note that we're looking at median wages rather than average wages. This distinction is crucial in Mongolia, where a small number of highly paid workers can skew the average. The median gives us a more accurate picture of how the typical Mongolian worker's earnings have changed.

The chart above illustrates both real and nominal wage growth. While nominal wages (the amount you see on your paycheck) increased by a staggering 167% from 2014 to 2023, real wages (which account for inflation) grew by 50%. This means that despite rising prices, the purchasing power of the average Mongolian worker has improved significantly over the past decade.

Conclusion: A Complex Economic Picture¶

The cost of living in Mongolia presents a complex picture of economic change. On one hand, we see rising prices across many categories, particularly in essential items like food. On the other hand, significant wage growth has helped to offset these increases for many Mongolians.

The shifting balance between food and non-food expenditures reflects broader changes in Mongolian society, as urbanization and development reshape spending priorities. While challenges remain, the overall trend of rising real wages suggests that many Mongolians are better equipped to handle these changes than they were a decade ago.

As Mongolia continues to navigate its economic development, keeping an eye on these trends will be crucial for policymakers, businesses, and citizens alike. The interplay between wages, prices, and spending patterns will continue to shape the cost of living landscape in the coming years.