Inflation accelerates

KAZAKHSTAN - In Brief 02 Oct 2025 by Evgeny Gavrilenkov

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The Bureau of National Statistics reported that inflation in September reached 1.1% m-o-m and 12.9% y-o-y, up from 12.2% y-o-y in August. It seems that previously delayed budgetary spending is now aligning with the upwardly revised plans. This year, the government adjusted expenditures for the regional budgets while keeping the republican budget expenditures unchanged. Domestic demand is still overheated, as shown by the non-food inflation figures for September. Non-food prices rose by 1.5% m-o-m, driven not only by budgetary spending but also by the rapid growth in household lending, which we've discussed before. Food prices increased by 0.9% m-o-m, while service prices went up by 1.0%. Y-o-y, the services segment saw the fastest price growth at 15.3%, with food and non-food prices rising by 11.7% and 10.8%, respectively. The weakening of the tenge has driven up non-food prices, as most durable goods are imported (with the USD/KZT exchange rate at around 548 at the time of writing). This trend is expected amid high inflation. We anticipate gradual disinflation by 2026, provided next year’s expenditures aren’t revised upward again. The NBK previously stated that its base rate target for the end of 2025 remains at 17.25%, though this could change if inflation picks up further. We anticipate the NBK may raise the base rate by 50 bps next week, keeping the door open to revising the year-end target upward. While monthly inflation is likely to stay above 1.0% m-o-m for the rest of the year, annual inflation won’t rise as sharply as it did in September, given that in September 2024 it was 0.4% m-o-m and remained steady at 0.9% m-o-m from October to December 2024.