Kazakhstan: Inflation falls to 15-month low in December
January 4, 2017
Consumer prices in Kazakhstan rose 0.9% from the previous month in December, which came in below the 1.2% increase observed in November. December’s result stemmed from a slowdown in most price categories, with the exception of furnishing, recreation and transport, which saw faster increases over the previous month.
Inflation fell from 8.7% in November to 8.5% in December, the lowest rate since September 2015. The reading also came in well below the 13.6% rate seen at the end of 2015. Inflation began to fall abruptly from 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 fall in inflation and inflation expectations, the National Bank of Kazakhstan announced a further cut in the monetary policy rate at its last meeting of 2016. The Central Bank has cut interest rates by a cumulative 500 basis points this year.
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 15.1% in November to 14.7% in December.
Author: Ricardo Aceves, Senior Economist