The National Bank of Kazakhstan has raised its inflation forecast for 2025 and 2026 in its baseline scenario, according to the regulator’s November Monetary Policy Report.
The updated forecast projects inflation in the range of 12-13% in 2025 and 9.5-12.5% in 2026. The outlook for 2027 remains unchanged, with inflation expected to slow to 5.5-7.5%.
In comparison, the Bank’s August report had forecast inflation at 11-12.5% for 2025 and 9.5-11.5% for 2026.
The revision reflects persistent inflationary pressures, as both actual inflation and inflation expectations among households and businesses continue to exceed earlier projections. Additionally, administered prices are contributing to the increase. While their growth is expected to decelerate under the “inflation +5%” framework in 2026-2027, the cost of goods and services remains under significant pressure.
The broader forecast range for 2026 highlights rising uncertainty related to the planned tax reform, its impact on aggregate demand, and expanded financing by the quasi-budgetary sector.
Key risks identified by the regulator include:
– rising domestic consumer demand
– accelerating external inflation
– sustained high inflation expectations
– secondary effects from increased regulated prices, including fuel and VAT
A new Tax Code is scheduled to take effect in 2026, raising the VAT rate from 12% to 16%. Additionally, utility tariff and fuel price freezes will be lifted by early Q2 2025, further contributing to inflationary pressure.
The report also flags the scale of state involvement in the economy as a potential inflation driver. “A significant amount of quasi-fiscal injections could increase inflationary pressure and partially offset the effect of the upcoming fiscal consolidation of the republican budget,” the Bank stated.
Despite these risks, the National Bank expects inflationary pressures to ease gradually, supported by a moderately tight monetary policy and anti-inflation measures implemented under a joint program with the government and the Agency for Regulation and Development of the Financial Market.
A further stabilizing factor could be a decline in inflation among Kazakhstan’s key trading partners.
The Times of Central Asia previously reported that the International Monetary Fund links Kazakhstan’s high inflation to signs of economic overheating.
