Consumer prices in Kazakhstan increased by 11.5 % y/y in October, easing from a 16.6% hike in September, the State Statistics Committee said on November 1.

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 12.5% at its latest meeting in September. Since the beginning of the year, the bank bank cut its benchmark by a cumulative 450 basis points. The bank does not rule out the possibility of cutting the rate further in November if its inflation expectations are met.

October was the third 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 KZT336 against the greenback on November 2, 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 fell to 59% of all deposits in August from 70% at the start of the year.

On a monthly basis, consumer prices edged up 0.2% in October, slowing down from the 0.5% rise seen in September.

Prices of foodstuffs went up by 0.8% m/m and 19.4% y/y in October and were higher by 5.7% compared to their level in December 2015. Prices of non-foodstuffs rose by 0.7% m/m and 15.7% y/y and of services by 0.2% m/m and 8.4% y/y.

Producer prices for industrial goods went up by 0.3% m/m and 19.9% y/y in October and were 14.8% higher than in December 2015. Producer prices increased by 14.9% in the mining sector in January-October and by 16.2% in the processing sector. Prices of industrial services stood increased by 3.7% in the period.