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.
Author: Ricardo Aceves, Senior Economist