Kazakhstan's inflation rate projected to decline, EDB talks stabilizing factors

Kazakhstan Materials 16 February 2023 18:40 (UTC +04:00)
Emin Sevdimaliyev
Emin Sevdimaliyev
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BAKU, Azerbaijan, February 16. Kazakhstan is projected to overcome the highest point of inflation in the early months of 2023 and this indicator will subside to 7.8 percent, a source at the Eurasian Development Bank told Trend.

The bank representative added that this will be facilitated primarily by the diminishing pressure from the external sector.

“The first indicators are already visible, FAO Food Price Index is reducing for nine consecutive months, and the reduction of maritime shipment prices points to the restoration of the global supply chain,” the EDB representative said.

Another reason explaining the possible drop in inflation in Kazakhstan is the decrease in inflation in Russia and China, which are some of Kazakhstan’s most important trade partners. Currently, the inflation trajectory suggests that Russian and China passed the peak of inflation in the second half of 2022.

He added that the increase of the base rate initiated by the National Bank of Kazakhstan in the second half of the year, and developing actively in October and December 2022 also had a significant pacifying effect on Kazakh inflation.

“The tightening of monetary policy contributed to the stabilization of inflationary expectations, which in turn is aimed at cooling down excess consumer demand,” the source noted.

Regarding the proinflationary risks, the EDB representatives said that they are of exogenous nature.

“We cannot exclude that oil prices will remain at the current level and the drop will lead to decreasing export revenue. This will create pressure on the exchange rate of Kazakh tenge and impact consumer prices,” the bank representative concluded.