Kazakhstan: Inflation climbs to a near two-year high in June
Latest reading: Inflation climbed to 11.8% in June from May’s 11.3%, marking the joint-highest rate since August 2023. The reading remained entrenched above the Central Bank’s medium-term target of 5.0%, likely fanned by a weakening tenge vis-à-vis the Russian ruble plus stubbornly high inflation in key trading partner Russia. According to the preliminary release, the acceleration was broad-based, with services and food costs gaining traction.
As a result, the trend pointed up, with annual average inflation rising to 9.4% in June from 9.1% in May, the joint-highest reading in nearly a year.
Finally, consumer prices rose 0.82% over the previous month in June, below May’s 0.92% increase.
Outlook: Our panel expects price pressures to have peaked in Q2, and sees the effect of past rate hikes permeating through the real economy and driving inflation down in turn; interest rates should remain at some of the highest levels in recent years in the coming quarters. Still, inflation should accelerate in 2025 as a whole from 2024, remain one of highest in the Common Wealth of Independent States, and be broadly double the Central Bank’s target. Significant tailwinds include VAT hikes, loose fiscal policy and utility reforms plus a sky-high inflation in key trading partner Russia and a weak tenge driving up imported inflation.