Inflation in Kazakhstan is projected to be between 8.7% and 9.1% year-on-year by the end of February, according to analysts surveyed by the Interfax-Kazakhstan agency. The monthly price increase is expected to fall within the range of 0.9% to 1.1%.
In January, the annual inflation rate in Kazakhstan rose from 8.6% in December to 8.9%, while the monthly rate increased from 0.9% in December to 1.1%.
According to Olga Belenkaya, head of the macroeconomic analysis department at FG "Finam," the annual consumer price index (CPI) is expected to slow down to 8.7-8.8%, with the monthly rate at 0.9-1%.
“In February, the inflationary factor could have been the planned increase in prices for fuel and liquefied gas, as warned by the Minister of Energy, while disinflationary factors include the decline in world food prices and the strengthening of the tenge. We believe that inflation in February may reach 0.9-1% month-on-month and 8.7-8.8% year-on-year,” commented Olga Belenkaya.
As the expert explains, inflation in January accelerated more than expected: in that month, food prices increased the most (1.4% month-on-month), along with housing and communal services (1.4%) and healthcare (1.8%).
“The heightened inflationary pressure is linked to tariff policies (the 'Tariffs for Investments' program), the impact of budgetary stimulus (the budget deficit of the Republic of Kazakhstan in 2024 increased by nearly 30% to 3.6 trillion tenge or 2.7% of GDP), and rapid growth in lending (business loans rose by 17.9% last year, while loans to individuals increased by 24%, including consumer loans which grew by 33.5%). Consequently, the growth of monetary aggregates sharply accelerated in December of last year – the monetary base grew by 16.4% (month-on-month) (26.6% year-on-year), and the money supply increased by 7.2% (month-on-month) (19.2% year-on-year),” explains the head of the macroeconomic analysis department at FG "Finam."
Another inflationary factor at the end of last year and the beginning of January was the weakening of the tenge against the dollar. However, the expert notes that from mid-January to mid-February, the tenge strengthened against the dollar.
“Part of this could be attributed to the mirroring mechanism initiated by the National Bank in mid-January, which involves selling US dollars on the domestic currency market obtained from the sale of gold previously purchased from local gold mining companies,” explains Olga Belenkaya.
She reminds us that under this decision, 244 billion tenge were sterilized in January, and in February, an amount of approximately 250 billion tenge is expected.
The forecast by the director of the sovereign and regional ratings group at AKRA, Zhannur Ashigali, suggests that annual inflation will range between 8.8% and 8.9%, with a monthly rate of 1%.
“In February, we expect monthly inflation close to 1%, which would result in an annual inflation rate of 8.8-8.9%. At the same time, the annual inflation remains nearly 4 percentage points above the target level (the inflation target is 5% – IF-K), and according to the most optimistic forecasts, this level will not be reached before 2027,” believes Zhannur Ashigali.
He states that consumer prices are supported by inflation in services, “which are adjusting to previously more noticeable inflation in food and non-food products.”
“Moreover, the external inflationary background continues to have an impact, with rising inflation in trading partner countries that hold a significant share of Kazakhstan's domestic goods market – primarily Russia, as well as inflationary expectations in the economy, which received a new signal of support in January and early February from both regulated prices and purely market demand,” he adds.
Experts from the analytical center of the Association of Financiers of Kazakhstan (AFK) forecast annual inflation to be in the range of 8.8% to 9.1%, with a monthly CPI of 0.9% to 1.1%. They state that high inflationary pressure persists in the economy.
“Inflationary pressure in the economy remains high against the backdrop of rising prices for regulated services, the ongoing pass-through of currency depreciation into prices, increased business costs due to rising raw material prices, electricity, and imported components, high fiscal expenditures (the state budget for the current year anticipates an increase in expenditures to 33.5 trillion tenge), rising wages and social payments, and a general significant increase in the money supply in the country (+19.5% year-on-year by early February). Thus, this is a set of factors on both the demand and supply sides,” reported AFK.
The growing inflationary pressure in the economy can also be inferred from operational data on price changes for socially significant food products (SSFP), note experts from the analytical center. From February 1 to 18, prices for SSFP increased by 1%, and since the beginning of the year, they have risen by 2.6%. Meanwhile, the external environment in February has been more inflationary.
“The strengthening of the ruble against the tenge (by 10.5% since the beginning of February) makes imports from Russia more expensive (almost one-third of all goods in the country come from Russia), while the trade wars initiated by the White House have raised concerns about a slowdown in the global economy, exerted pressure on commodity markets, worsened risk appetite in global capital markets, and may lead to increased inflationary pressure in the global economy,” added AFK.
Inflation at the end of 2024 is expected to slow down from 9.8% in 2023 to 8.6%.
The National Bank's baseline scenario predicts that the consumer price index will range from 6.5% to 8.5% in 2025, and from 5.5% to 7.5% in 2026. “In 2025, a higher inflation level is expected within the range of 6.5% to 8.5% due to the strengthening fiscal impulse and other factors. In 2026, a moderately tight monetary policy will contribute to a slowdown in price growth to 5.5% to 7.5%. Overall inflation is expected to align with the target around 2027,” states the macro-regulator's report on monetary policy for November.
The National Bank aims to stabilize inflation near 5% in the medium term.