According to the Committee on Statistics, the inflation amounted to 0.5% mom in March. Taking into account the seasonal correction, the rate of price growth, according to our estimates, in March was at 0.7% mom. The annual level of inflation slightly slowed to 7.7%.

According to the Committee on Statistics, the inflation amounted to 0.5% mom in March. Taking into account the seasonal correction, the rate of price growth, according to our estimates, in March was at 0.7% mom. The annual level of inflation slightly slowed to 7.7%.

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Food products’ inflation decelerated to 0.6% mom (1.4% mom in February), and to 1% mom in seasonally adjusted terms (hereinafter – sa). There is an observed rise in prices for fruits and vegetables (+2% mom). For other food products, inflation did not exceed 1% mom.

The cost of non-food products rose slightly less than in February: in March - at 0.4% mom (0.6% mom in February), but 0.9% momsa. There is a continued growth in prices for gasoline (+1.2% mom), textile (+1% mom), clothes (+0.3% mom).

In service sector, the inflation amounted to 0.4% mom (0.9% mom in February), but to 0.7% momsa. The transport services rose by 1% mom, especially air transportation (+11% mom). In other types of paid services inflation did not exceed half a percentage point mom.

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Our opinion

After a sharp rise in November last year, the rate of price growth gradually declined, in January, to 0.8% mom. But, in February, the acceleration of inflation resumed, reaching 1% mom. In March, the inflation slowed, nevertheless, in seasonally adjusted terms, inflation remains at an elevated level of 0.7% mom, and 0.8% mom in February. Therefore, in our opinion, it is difficult to speak of a sharp slowdown in the level of price growth.

The increased level of inflation is supported by a rise in prices for imported goods and tariffs. In current year, the growth of public spending (the increase in social payments and pensions of up to 20%) and a faster decline in interest rates, and as a consequence – the  fall of propensity to save in population (deposit rates in February were lower by 0.2-0.3pp) and their shift to consumption, will put pressure on inflation expectations and inflation. Therefore, according to our forecasts, the annual inflation rate by the end of the year will be kept at the upper border of the NBK corridor at 8%.