Kazakhstan records decrease in annual inflation in December 2021

Kazakhstan 24 January 2022 17:28 (UTC +04:00)
Kazakhstan records decrease in annual inflation in December 2021

BAKU, Azerbaijan, Jan. 24


The annual inflation rate decreased to 8.4 percent in Kazakhstan in December 2021, Trend reports referring to the National Bank of Kazakhstan.

The monthly price growth rates were lower than the historical average from November through December 2021 amid the implementation of anti-inflationary response measures.

The food inflation rate greatly decreased in December 2021 and reached 9.9 percent in annual terms. This is connected with the implementation of anti-inflationary response measures and the annual inflation of high monthly values for certain food products.

Annual disinflation is observed for dairy products, eggs, oils, sugar, and vegetables. Despite this, the annual growth rate of the cost of fruits and vegetables is still at high levels.

The price for beets as of 2021 increased by 73 percent, cabbage – by 37.5 percent, carrots – by 29.5 percent, potatoes – by 20.2 percent in annual terms. The annual inflation rate for meat, bakery products, and cereals, as well as soft drinks, accelerated.

The food inflation rate greatly slowed down while the non-food component increased up to 8.5 percent as of December 2021. The current high value of annual non-food inflation has been observed for the first time since May 2018.

The main contribution was made as a result of the increase in prices for fuels and lubricants (23.2 percent), cars (14.7 percent) and solid fuels (9.5 percent), including coal (9.8 percent). Annual growth in gasoline prices accelerated to 19.6 percent, diesel fuel - by 46.5 percent.

Annual inflation of paid services slowed to 6.5 percent in December 2021 (6.9 percent in October 2021, 4.2 percent in December 2020) amid a more moderate increase in prices for regulated utilities, hairdressing services, restaurants and hotels.

The growth rate of tariffs for regulated utilities slowed up to 4.1 percent as a result of lower tariffs for heating and hot water. At the same time, growth rates still exceed the level of December 2020.

The cost of rental housing continued increasing (19.8 percent in December 2021). There was a sharp increase in prices for certain types of transport services due to the increased demand in December 2021.

The core inflation level shows the instability of the slowdown in inflationary processes. Various estimates of core inflation, after slowing down from August through November 2021, again accelerated in December 2021 and were above the target level. This is connected with the high rise in prices for non-regulated goods and services.

Inflationary expectations, despite the decline, remain elevated. The quantitative estimate of inflation for the year ahead was 10.3 percent in December 2021.

The majority of respondents (66 percent) still expect the current price growth to continue or accelerate during the next 12 months. Among them, the share of those expecting further price increases slightly decreased from a historical high of 35 percent in November to 31 percent in December 2021.

Taking into account the development of the situation in the global economy and current internal factors in Kazakhstan, according to the renewed forecast, the National Bank expects a further slowdown in the inflation rate to 6-6.5 percent by the end of 2022.

At the same time, the inflationary processes may increase in connection with the tragic events in Kazakhstan in early January 2022 and a relatively low base in the first half of 2021, the main pressure of which will fall on the first quarter of this year.

The risks of accelerating the inflation rate may increase in the second half of this year after the expiration of the period of validity (180 days) of measures for temporary regulation of prices for socially important food products, fuel, and utilities.

The National Bank continues to tighten monetary policy proceeding from the current balance of risks, the instability of the slowdown in inflation in late 2021, as well as due to the acceleration of the non-food component, as well as elevated inflation expectations.

Together with the effective implementation of the set of measures to control inflation developed by the government, the disinflationary monetary policy of the National Bank will make it possible to reduce the inflation rate in accordance with the target set for 2022 - 4-6 percent.