Kazakhstan Inflation Slows to 9.8% in August

Food inflation cooled to 9.5%, while non-food inflation slowed to 11.4% as the stronger tenge reduced the cost of imported goods. Service inflation also eased to 8.9%, helped by slower gains in unregulated services and a moderating contribution from housing and utilities.

For investors, the key question is whether the disinflation trend is durable enough to keep policy from tightening further. Monthly inflation was still 0.6% in August, unchanged from July, while core inflation held at 0.7% month on month and seasonally adjusted inflation came in at 0.9%, suggesting underlying price pressure has not disappeared.

The central bank also pointed to a drop in inflation expectations, with the public’s one-year outlook falling to 12.1% in July from 13.4% a month earlier. That is important for domestic asset pricing because lower expectations can support the tenge, reduce pressure on bond yields and make future rate decisions less aggressive.

Suleimenov also highlighted a relatively strong non-oil economy as a disinflationary factor. Excluding mining, GDP growth is estimated at 5.4%, with construction, manufacturing, transport and storage leading the expansion, while retail sales rose 4.1% year on year in real terms in January-July.

The backdrop gives the National Bank a more favorable near-term inflation narrative, but the mix is not yet clean. Persistent consumer demand and higher fuel prices are still slowing the disinflation process, leaving policymakers dependent on the currency, oil prices and import costs to keep inflation moving lower in the months ahead.