Kazakhstan’s Inflation Slows Down to 10.3% in November

ASTANA – The inflation rate in Kazakhstan slowed down in November to 10.3% in annual terms, said Deputy Chair of the National Bank Vitaliy Tutushkin at a Dec. 12 government meeting, reported the Prime Minister’s press service.

Kazakh Government. Photo credit: Prime Minister’s press service

In the coming months, annual inflation in Kazakhstan is expected to decrease below 10%.

“The decline in annual inflation and its forecasts made it possible to reduce the base rate to 15.75%. At the same time, certain factors and risks require maintaining monetary conditions at the current level to stabilize inflation,” said Tutushkin.

However, several essential price indicators point to continued inflationary pressure in the economy. Monthly inflation in November was 1%, exceeding both the historical average and the target value estimate.

Over the past month, the largest price increase was observed for vegetables, eggs, and cereals, among non-food products – for clothing and footwear, transport, pharmaceutical products, paid services – for housing and communal services tariffs, internet, and air travel.

Prime Minister Alikhan Smailov applauded the drop in inflation to 10.3% in November and called for continued efforts to control and reduce inflation.

Global Economic Activity and Business Indices

Tutushkin said that global economic activity improved in November due to the stabilization of the volume of new orders, which ensured a moderate increase in production volumes.

The country’s business activity index hit 49 points in November. The figure increased in manufacturing – 51.4 and construction – 50.2, but decreased in the mining industry – 47.4 and the services sector – 48.3. The business climate index in the country remains in the positive zone due to the continued positive expectations of enterprises regarding future business conditions.

 Currency and Financial Market Developments

Since the beginning of this year, the national currency has strengthened by 1% to 458.24 tenge per U.S. dollar exchange rate. The tenge has been supported by currency sales from the National Fund ($8.8 billion since the beginning of the year).

During the reporting period, the influx of non-residents into the government securities market reached $258 million. There is also an increase in seasonal demand from importers, mainly associated with the intensification of the project implementation cycle. Tutushkin emphasized that the National Bank continues to adhere to the flexible exchange rate regime and does not conduct currency interventions.

Reserves and National Fund Performance

At the end of November this year, gross international reserves totaled $92.7 billion. The National Bank’s gold and foreign exchange reserves have decreased since the beginning of the year by 2.8% (to $34.1 billion) due to a decrease in the balances of second-tier banks (STBs) in foreign currency accounts at the National Bank, as well as currency conversion to pay the Finance Ministry on its obligations.

The assets of the National Fund have increased since the beginning of the year by 5.2% (to $58.6 billion). The primary growth was driven by an investment income of 7.9% (or $4.4 billion). Total revenues to the fund during the reporting period reached 4.4 trillion tenge (US$9.6 billion). 

The National Fund transferred 3.9 trillion tenge (US$8.5 billion) to the national budget, including the purchase of shares of KazMunayGas National Company to finance the state budget. Some 74 billion tenge (US$161.86 million) were allocated to purchase Samruk Kazyna Sovereign Wealth Fund bonds to finance the Dostyk-Moiynty project.

Assets of the Single Accumulative Pension Fund (SAPF) demonstrate positive dynamics, growing by 18.6% to 17.3 trillion tenge (US$37.84 billion) since the beginning of this year. The volume of investment income reached 1.3 trillion tenge (US$2.8 billion), pension contributions – 1.9 trillion tenge (US$4.15 billion), and early withdrawals – nearly 255 billion tenge (US$557.7 million).

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