Kazakhstan’s National Bank discloses inflation expectations

Kazakhstan Materials 6 December 2021 17:59 (UTC +04:00)
Kazakhstan’s National Bank discloses inflation expectations

BAKU, Azerbaijan, Dec. 6


Taking into account the current dynamics of price growth, the National Bank expects inflation in Kazakhstan to be in the range of 8.5 - 8.7 percent by the end of 2021, Trend reports with reference to the National Bank.

According to the bank, with further effective implementation by the government and local executive bodies of the Package of Anti-Inflationary Response Measures, inflation will form close to the lower limit of the forecast range.

“In the short term, the expected acceleration of inflation in non-food products and services will be offset by a further slowdown in the growth of food prices. A moderate increase in the cost of paid services is expected, which will be due to the preservation of the current pricing in the market of regulated housing and communal services,” the bank says.

In addition, the bank reports that upward pressure on prices will be exerted by the persisting external inflationary background, acceleration of inflationary processes in non-food markets, recovery of consumer activity, high inflationary expectations, and an indirect effect from the growth of prices for fuels and lubricants through the growth of the cost of goods and services.

“There are also risks of further growth in electricity tariffs against the backdrop of the expected rise in coal prices. Inflation is expected to peak in the first quarter of 2022, after which it will gradually slow down. In the medium term, a higher external inflationary background is expected in comparison with previous estimates. This is due to the upward revision of inflation in the countries - trade partners of Kazakhstan and the higher dynamics of external food prices. A more restrained trajectory of the output gap will compensate for the influence of external factors on the medium-term dynamics of inflation,” the message says.

In addition, according to the bank, in 2022, inflation is expected to gradually slow down to 6.0-6.5 percent, taking into account the continued implementation of the Anti-Inflationary Response Package.

“The decline in inflation will be supported by a high base formed in 2021. At the same time, the realization of pro inflationary risks associated with imbalances in certain markets for goods and services, interruptions in global and local supply chains, and persistence of high inflationary expectations may lead to the formation of inflation above the forecast value in 2022,” the bank says.