Consumer prices in Kazakhstan increased by 8.7% y/y in November, easing from a 11.5% hike in October, the State Statistics Committee said on December 2.
The slowdown will be welcome news for the Kazakh central bank, which said it expects inflation to gradually ease to come close to its target of 8% by the end of the year. The bank cut its key interest rate by 0.5 percentage points to 12% at its latest meeting on November 14. Since the beginning of the year, the rate has been lowered by a cumulative 500 basis points.
November was the fourth straight month to see price growth easing. Previously, inflation had been on a rising trend for 11 months after the central bank’s decision in August 2015 to abandon its currency peg saw the tenge lose over 40% of its value against the US dollar. The Kazakh currency, however, started strengthening sharply in August and September on the news of OPEC’s agreement to consider a freeze in oil production in November. The tenge reached KZT335.7 against the greenback on December 4, compared to its record low of KZT383.9 seen on January 22.
In addition, the tenge has been stablising in the past months, which is partially related to economic stablisation and signs of modest recovery in Russia, a key trading partner for Kazakhstan. Increased confidence in the local currency saw the share of dollar-denominated deposits in the country fall to 59% of all deposits in August from 70% at the start of the year.
On a monthly basis, consumer prices edged up 1.2% in November, accelerating from the 0.2% rise seen in October.
Prices of foodstuffs went up by 2% m/m and 9.1% y/y in November and were higher by 7.8% compared to their level in December 2015. Prices of non-foodstuffs rose by 0.9% m/m and 9.8% y/y and of services by 0.5% m/m and 7.4% y/y.
Producer prices for industrial goods went up by 2.4% m/m and 17.8% y/y in November and were 17.5% higher than in December 2015. Producer prices increased by 18.9% in the mining sector in January-November and by 17.3% in the processing sector. Prices of industrial services stood increased by 3.9% in the period.