After a brief slowdown, inflation accelerated in February

Assan KurmanbekovMarch 03, 2018

Consumer price inflation accelerated on a monthly basis showing 0.7% in February 2018 (0.6% in January), the annual figure came in at 6.5% (6.8% in January).

According to the Committee on statistics, consumer price inflation accelerated on a monthly basis showing 0.7% in February 2018 (0.6% in January), the annual figure came in at 6.5% (6.8% in January), average annual inflation level marginally decreased to 7.3%. By our assessment, the seasonally-adjusted (hereinafter-sa) prices in February increased by 0.5% mom, compared with a 0.2% mom on average in the previous three months.


Food prices rose by 0.8% mom, 0.4% mom sa in February. Prices for cereals were down by 2.2% mom, -2.6% mom for eggs, -0.4% mom for poultry, marginally cheaper flour, bakery products and tea. Prices for fruits and vegetables +3.2% mom, dairy products +0.7% mom, meat +0.3% mom, oils and fats +0.5% mom, sugar + 1.8% mom.

Prices of non-food items increased by 0.5% mom and 0.8% mom sa in February. Prices rose for: clothing +0.2% mom, shoes +0.3% mom +0.5% for medications, fuel prices have risen again: petrol +1.5% mom, diesel +0.8% mom.

In the service’s sector the increase was at 0.7% mom and 0.4% mom sa in February. Housing services have increased +1.2% mom, central heating +1.6% mom, electricity +2.6% mom, health service +0.7% mom, transport +0.6% mom.


Results from population surveys for January, published by the NBRK showed weakening inflationary expectations. The percentage of respondents, expecting accelerating price growth in the next 12 months showed a decrease for the second month in a row to 19.2% in January (11.1% in January 2017.) after reaching a peak of 21.3% in November 2017. The proportion of respondents awaiting either continuous reduction or no change in prices increased to 9.4% (13.3% in January 2017). In January, 43.8% (35.5% in January 2017) of respondents expect the dollar appreciation, while that number stood at 63.4% at the peak in September 2017.

Our opinion

The exchange rate of tenge to US dollar rose by 1.6% in February this year to 322 (average for February) and 3.5% since the beginning of the year. National currency favoured the positive price changes in the oil market and the stability of the ruble.

The slight acceleration of inflation in February was caused by rising cost of fuel, fruit and vegetables and the increase of tariffs for public services. This reflects still unbalanced situation in the market of petroleum products and the inclusion of the investment component in the State monopolies’s tariffs.

Despite a slight acceleration of inflation we do  not expect its strengthening, on the contrary, we believe it is possible that inflation will be below 6.5% at the end of the current year.     

Anchoring of inflation in a new corridor of 5-7% accompanied by stabilizing inflation expectations, create preconditions for further gradual easing of monetary policy, with some concern coming from the growth of consumer lending while the economic situation in non-oil sector improving rather slowly and the demand from enterprises for bank loans is virtually non-existent.