Kazakhstan: Inflation soars in October due to currency depreciation
November 3, 2015
Kazakhstan consumer prices jumped 5.2% in October over the previous month, which came in well above the 1.0% increase tallied in September. The monthly increase—the highest on record—reflected the impact of the devaluation of the Kazakh tenge, following the National Bank of Kazakhstan’s decision to let the currency to float freely. All prices that comprise the basket of goods increased over the previous month, in particular prices of food, clothing and footwear, furnishing and healthcare soared compared to the previous month.
As a result of the monthly jump, inflation climbed from 4.4% in September to 9.4% in October, which marked the highest level since December 2008. 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.
Inflation is likely to continue rising in the coming months, mainly due higher prices for imported goods as a result of the devaluation of the national currency. However, as domestic demand is expected to weaken going forward, this should dampen inflationary pressures and bring inflation down the Central bank’s target in the medium term.
Author: Ricardo Aceves, Senior Economist