Annual consumer price index (CPI) inflation in Kazakhstan stood at 7.9% in June, according to data published by the country’s statistics office.
The figure is in line with the average inflation rate registered in 2020, namely 7.5%. The regulator was previously aiming to achieve a 4% inflation rate in 2020, but consumer prices moved away from the upper boundary of the 4-6% inflation corridor that the central bank was maintaining. Inflation officially surpassed the 6% boundary in March 2020 and continued to rise due to the effects of the global coronavirus (COVID-19) pandemic.
Annual food inflation slowed to 10.6% in June, up from 9.3% in May. Non-food inflation stood at 6.9% in June, up from 6.7% in the previous month.
Inflation in prices of services registered at 5.6% in June, up from 5.1% in May.
“Despite the base effects of 2020, food inflation regained its rapid pace due to rising global food prices, which accelerated to 40% y/y in US dollar terms in May. Given the high share of food in the consumer basket (40%) and in household expenditures (nearly 50%, according to the NBK (central bank)), such a factor could further weigh on inflation expectations, which eased somewhat in May,” the analytical arm of UK-based broker SOVA Capital said in a note.
“The surge in inflation means that the risks voiced during NBK’s June meeting appear to be materializing. As a result, we would expect inflation to finish the year at 7.4% y/y, far above the upper bound of the targeted range (4-6%), before stabilizing by 2H22. Considering such developments, we believe the NBK could consider an additional 100bps of tightening in 2H21 so that the base rate is at 10% by YE21,” it added.