Kazakhstan: Inflation continues to surge in March
April 1, 2016
In March, consumer prices rose 0.5% over the previous month, which was less than half the 1.1% increase observed in February. March’s increase was the slowest in seven months, which mainly reflected the recent stabilization in the exchange rate. Detailed data showed that the March’s reading was mainly the result of a slower increase in prices for food, electricity and transportation.
Inflation rose from 15.2% in February to 15.7% in March, which marked the highest level in seven and a half years. Inflation remains well above the National Bank of Kazakhstan inflation target established in September 2015. Under the new inflation targeting regime, the Central bank established an inflation target corridor of between 6.0% and 8.0% for the medium term. As a result of the sharp increase in March, the trend continues to signal that inflation is returning to levels last seen at the height of the global financial crisis. Annual average inflation rose from 8.0% in February to 8.8% in March, which marks the highest level since August 2009.
The National Bank of Kazakhstan (NBK) decided to leave the one-day repo rate—its main monetary policy rate—unchanged 17.00% at its policy meeting on 14 March, while it looks to curb rising inflation and stabilize the tenge. Moreover, like the Russian ruble, the value of the Kazakh tenge remains closely correlated with movements in the oil price.
Author: Ricardo Aceves, Senior Economist