Inflation in Kazakhstan remains elevated, albeit with no signs of acceleration

KAZAKHSTAN - In Brief 07 Mar 2023 by Alexander Kudrin

---

According to the Bureau of National Statistics, inflation m-o-m in February was 1.3%, i.e., much higher than in February 2022 (0.8% m-o-m). As a result, y-o-y inflation in February moved to 21.3% (from 20.7% a month ago), while the 6M moving average monthly inflation stayed at 1.4%, i.e., almost the same as a month ago. The latter figure translates into annualized 18.2%, which is above the NBK’s base rate of 16.75%, though the 3M moving average (1.2%) translates into 15.4% annualized. Therefore, after looking into various factors, the National Bank of Kazakhstan decided to keep the base rate unchanged (the board meeting took place on February 24). On top of that, the Bureau of National Statistics also reported that in seven days ending on February 28, weekly price increases on socially essential goods (i.e., most commonly consumed foodstuffs) moderated and fell to 0.2% w-o-w. Previous weeks of February saw this index higher, and the monthly price index on socially essential goods was 1.2%. Combined with the fact that PPI in February was 0.1% m-o-m, and prices on construction works rose by 0.1% m-o-m also, one may conclude that inflation slowly moderates. In March, it may decelerate not only on a y-o-y basis, as in March 2022, monthly inflation reached 3.7%, but m-o-m as well. If so, the annualized 6M moving average inflation will likely become comparable with the NBK’s base rate. The regulator may not touch the key rate at its board meeting on April 7, while the NBK meeting scheduled at the end of May could bring a lower base rate. Evgeny Gavrilenkov Alexander Kudrin