Kazakhstan: Inflation falls further in September
October 3, 2016
In September, consumer prices rose 0.2% over the previous month. This matched August’s reading, which had been the softest in 14 months. September’s mild increase mainly reflected that lower food prices compensated for higher prices in other categories, mainly in education.
Inflation fell from 17.6% in August to 16.6% in September, the lowest in five months. Inflation had begun to accelerate following the devaluation of the currency in September 2015—when it was allowed to float freely—and reached an eight-year high in July. Inflation is now expected to fall more rapidly in the coming months since the currency has stabilized and as a base effect fades. Although inflation has remained well above the National Bank of Kazakhstan’s inflation target corridor of between 6.0% and 8.0%, the Central Bank has cut its key monetary policy rate by a cumulative 450 basis points this year.
The trend suggests that inflation is returning to the high levels last seen at the height of the global financial crisis. Annual average inflation rose from 14.3% in August to 15.3% in September, which is the highest level since February 2009.
Author: Ricardo Aceves, Senior Economist