Kazakhstan: Inflation falls to one-year low in October
November 1, 2016
In October, consumer prices rose 0.6% from the previous month. This came in above the 0.2% increase observed in August, marked a seven-month high and reflected increases across the board, particularly in prices for food, alcoholic beverages and clothing.
Despite the monthly increase, inflation plunged from 16.6% in September to 11.5% in October, the lowest in a year. Inflation fell abruptly in October due to a base effect, as it had begun to accelerate in October 2015, following the currency devaluation, when the tenge was allowed to float freely. Inflation is expected to continue falling more rapidly in the coming months since the currency has stabilized and a high base of comparison will persist. Due to the rapid fall in inflation and inflation expectations, the National Bank of Kazakhstan announced a further cut in the monetary policy rate in November. The Central Bank has cut interest rates by a cumulative 500 basis points this year.
The trend suggests that inflation is returning to the levels last seen at the height of the global financial crisis this year. Annual average inflation rose from 15.3% in September to 15.5% in October, which is the highest level since February 2009.
Author: Ricardo Aceves, Senior Economist