Like much of the world, Mongolia has experienced a significant increase in the cost of living due to global inflation since 2021. In 2022, Mongolia's annual inflation rate peaked at 15.2%, the highest since 2008. As of 2024, inflation appears to be gradually returning to the target level of 7% per year.

However, these broad inflation figures don't fully capture how people experience the impact of rising prices in their daily lives. The real effects of inflation are felt in the increased costs of everyday goods and services, which can vary significantly from the overall inflation rate.

So, I put together the chart above, taking heavy inspiration from this chart. Since 2010 the price of every category of product group tracked by the Mongolian National Statistics Office has increased. The biggest increase in prices has been in the price of education services (353%). This is followed by food and non-alcoholic beverages (327%), restaurants and hotels (304%), and clothing, footwear, and cloth (242%).

To make things clearer, I separated the product groups into two. The first (in red) shows the groups that have increased in price more than overall inflation. The second (in blue) shows the groups that have increased below the overall inflation rate. This shows how "affordable" each group is compared to inflation.

Of course, the real story here is not about the prices at all, but wages. Since 2010, the national average wage has increased by 626%! This coincides with my own experience as an employer and as a professor when I help my students find jobs.

There is a big caveat here. The National Statistics Office can only track officially reported wages (those reported via social insurance contributions). So while official average wages continue to increase, the grey economy is very much unknown.

Education¶

Now, before you blame private schools for education prices increasing 353%, you should keep in mind that universities are also included in this calculation (you can see the methodology here).

In 2014 (the earliest year I could find), the average university tuition fee per year was 1.5 million tugriks. In 2023, it was about 4.5 million tugriks for the Mongolian University of Science and Technology and a bit less for the Mongolian National University, depending on the major. That is just about a 3x increase in less than 10 years, and that is for public universities.

Public universities, along with private primary and secondary schools, are part of this trend of rising costs. Rather than focusing solely on the price increase, it's more important to consider whether the education provides value commensurate with its cost.

Housing Prices¶

A big worry I see online is people complaining about apartment prices. Yes, apartment prices have gone up every year. Yet housing has been increasing very close to the overall rate of inflation. In other words, apartments are just a bit more affordable in 2024 than they were in 2010. So, they are not very affordable but attainable.

Communication¶

My favorite line on this chart is the one for communication. Let's remember that this chart shows the increase in price over time. Since 2010, communication prices (including phone service and internet) have only increased by 16%.

Cell phone service seems to be improving rapidly, and I believe it is a good value in Mongolia. Home internet service is different. For Univision, a leading internet provider, Mongolians pay between $0.30 and $1.03 per megabit (Mbps). This is 2.75 to 10 times more expensive than Mongolia's neighbor, China. For Univision's cheapest home internet plan, expect to pay more per megabit than every Asian country where data exists.

The reality is that communication prices should have decreased since 2010. Technology is one of the few products where prices generally decrease. TVs, cell phones, printers, etc, are all cheaper than they were 14 years ago. Since 2008, Americans have seen a 92% decrease in the price per megabit for internet service. Unfortunately, Mongolians are still on the 2010 price structure.

Upper Income Country¶

Inflation means that most things increase in price over time, so it should not be surprising that prices increased. The current MongolBank inflation target is 7%. If that inflation level holds, prices would increase by about 150% over 14 years.

Mongolia is now considered an upper-middle-income country, joining China, Mexico, Kazakhstan, and Brazil. As the population's purchasing power increases, higher-quality products (at higher prices) will be demanded.