Kazakhstan Inflation February 2017

Kazakhstan

Kazakhstan: Inflation falls further in February

March 2, 2017

Consumer prices rose 1.0% from the previous month in February, coming in slightly above the 0.8% increase observed in January. February’s result stemmed from a faster increase in prices for food, as well as for housing, water and electricity.

Inflation edged down from 7.9% in January to 7.8% in February, the lowest rate since September 2015. Inflation began to fall abruptly starting in October 2016 due to a base effect and is expected to continue falling in the coming months, although at a slower pace, as the base effect fades. Due to the rapid drop in inflation and inflation expectations, the National Bank of Kazakhstan cut interest rates by a cumulative 500 basis points last year. As inflation remains within the NBK’s target range of 6.0%–8.0%, it decided to cut the key policy rate by 100 basis points to 11.00% at its February meeting.

As the economy adapts to new economic conditions, namely a more stable exchange rate and rising oil prices, the trend confirms that inflation is decelerating. Annual average inflation fell from 14.1% in January to 13.5% in February.

After falling to just above the upper ceiling of its target range in 2016, the National Bank of Kazakhstan expects inflation to fall to a range of between 6.5% and 7.0% this year. For 2018, the Bank expects inflation to fall within target of 5.0% and 7.0%. FocusEconomics Consensus Forecast panelists expect inflation to end 2017 at 7.1%, which is unchanged from the previous month’s forecast. By the end of 2018, our panel expects inflation to fall to 6.2%.


Author:, Senior Economist

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Kazakhstan Inflation February 2017 0

Note: Month-on-month changes and annual variation of consumer price index in %.
Source: Republic of Kazakhstan Agency of Statistics.


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