ASTANA, Kazakhstan, November 18. Fitch Ratings has updated its inflation forecast in Kazakhstan for the coming years, Trend reports.
Thus, inflation moderated to 10.8 percent in October after peaking at 21.3 percent in February, largely reflecting base effects, some modest easing in food inflation, and tighter monetary policy.
Fitch expects inflation to average 14.8 percent in 2023, and moderate to 9.5 percent in 2024, and 8 percent - in 2025, above the central bank's medium-term inflation target of 5 percent.
There are moderate upside risks to Fitch forecasts from second-round impacts of higher retail fuel prices, given subsidies for these products were reduced in July, and additional subsidy cuts are planned in coming years. Household inflation expectations have not trended down, despite inflation starting to fall.
The National Bank of Kazakhstan (NBK) cut rates by 25 basis points to 16.5 percent in August, and a further 50 basis points to 16 percent in October. Deposit dollarization levels have declined (30 percent as of 3Q2023-end, down from 36.7 percent in 2022) and the pace of credit growth moderated from 2022 levels, potentially indicating the impact of higher rates so far this year.
According to Fitch, a scheduled termination of the subsidized lending programs by the NBK in 2024 would signal stronger monetary policy independence if it proceeds.
Inflation in the Republic of Kazakhstan slowed down over the year and amounted to 10.8 percent in October 2023 (in September - 11.8 percent), over the month - 0.7 percent (previous month - 0.6 percent).
Prices for food products over the year increased by 10.4 percent (in September 2023 - 11.4 percent), for non-food products - by 11.1 percent (in September 2023 - 12.1 percent), for paid services - by 11 percent (in September 2023 – 11.9 percent).
Regionally in October 2023 in annual terms, the inflation rate exceeding the republican average was observed in nine regions, the highest of which were in Akmola (12.7 percent), North Kazakhstan (12.1 percent), and Zhetysu (11.7 percent) regions.