Inflation - The Times Of Central Asia

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Cost of Living

Uzbekistan Inflation: Consumers’ Estimates Exceed Official Rate

People in Uzbekistan believe prices have risen considerably faster than official inflation figures show, according to a survey by the Central Bank of the Republic of Uzbekistan. Respondents estimated annual price increases at 9.2% in September, compared with the official inflation rate of 6.4%. The survey covered 2,726 residents and measured their perceptions of price changes over the preceding 12 months. The nationwide estimate fell by 0.9 percentage points from 10.1% in August, according to survey data cited by economist Otabek Bakirov. Tashkent recorded the highest regional figure, at 11.9%, while pensioners nationwide put annual price increases at 12.5%, up 3.1 percentage points from their August assessment. Meat and dairy products were the most frequently cited sources of price increases, mentioned by 56% of respondents, followed by gasoline and other fuels (53%) and electricity and natural gas (36%). Compared with August, the share of respondents reporting substantial increases in electricity and natural gas prices rose by 17 percentage points. The shares citing fuel prices and transportation services each rose by 11 points, followed by nine points for restaurants, eight for education, and seven for healthcare. These figures measure changes in the proportion of people reporting higher prices, not the size of the price increases themselves. On November 4, the Central Bank raised its year-end inflation forecast from 6.5% to 7% and kept its benchmark interest rate at 14%, citing strong domestic demand and persistent price pressures. Uzbekistan's economy grew by 8.3% year on year in January–September, supported by industry, construction, and services. The bank now expects growth of around 8% for 2026. According to the bank, demand is exceeding the economy's capacity to supply goods and services, adding to inflationary pressure. Fluctuations in global food and energy prices could also push up import and transportation costs, while planned increases in government-regulated tariffs pose another inflation risk. Core inflation, which excludes certain volatile and government-regulated prices, stood at 5.5% in September. The Central Bank expects overall inflation to decline to its 5% target by the end of 2027. In neighboring Kazakhstan, annual inflation stood at 9.3% in September, while households expected prices to rise by 11.8% over the following year. The National Bank of Kazakhstan lowered its benchmark rate to 15.75% on October 23, its fourth consecutive cut during 2026, and signaled that further reductions could be paused.

Household spending

Food Spending in Kazakhstan Tops Half of Consumer Budgets

Kazakhstan, Central Asia's largest economy, ranks among the ten countries with the highest shares of consumer spending devoted to food in an international comparison. National figures show that food purchases continue to consume more than half of household consumer budgets despite rising cash incomes. According to international statistics from the United States Department of Agriculture (USDA), residents of Kazakhstan spent approximately 42% of their consumer budgets on food in 2025. The USDA measure covers food and nonalcoholic beverages purchased for consumption at home, excluding restaurant meals, alcohol, and tobacco. Higher shares were recorded in Nigeria, Myanmar, and Laos, as well as neighboring Uzbekistan. By comparison, food accounted for roughly a quarter of consumer spending in Russia and 6.4% in the U.S. Investment company Halyk Finance noted in a June 2025 analysis that Kazakhstan ranked sixth in the USDA comparison for 2023. Kazakhstan's Bureau of National Statistics uses a different food category, which also includes alcohol and tobacco. In the first quarter of 2026, this category accounted for 48.6% of household cash expenditures and approximately 54% of consumer spending. Consumer spending covers purchases of goods and services, while total cash expenditures also include debt repayments, taxes, and transfers to other households. Nonfood goods represented 19.9% of cash expenditures, services 21.7%, and another 7.6% went toward repaying loans and other debts. Halyk Finance found that this national food category had accounted for more than half of household cash expenditures for five consecutive years by early 2025. Since January 2026, however, the bureau has classified spending at cafes and restaurants as services rather than food expenditures. A decline in the reported food share compared with previous years therefore cannot automatically be interpreted as an improvement in living standards. The first-quarter share varied sharply by region, reaching 57.5% in the Zhetysu region, 56% in the Mangystau region, and 54.7% in the East Kazakhstan region. The figure was 41.2% in the capital, Astana, and 47.7% in Almaty. These differences reflect household incomes, food prices, the cost of services, and consumption patterns. Annual spending on food and nonalcoholic beverages in Kazakhstan averaged $1,292 per person in 2025, an increase of 13.9% from the previous year. Meat and meat products accounted for the largest share of the food budget in the second quarter of 2026. The bureau's household spending figures show that an average household spent 61,248 tenge, approximately $135, per month on them, about one-third of its food and nonalcoholic beverage expenditures. Bread and cereals accounted for about 14%, while dairy products represented approximately 12.6%. In the first quarter of 2026, average per capita cash income was 399,819 tenge, approximately $880 over three months, or about $294 per month. In local currency, the figure rose 12.9% year over year, but this was a nominal increase that did not account for inflation. In September, annual inflation was 9.3%, while food prices rose 8.5% year over year. For lower-income households, even moderate increases in the prices of basic groceries can significantly reduce the amount available for other needs....

interest rates

National Bank of Kazakhstan Cuts Base Rate to 15.75%

The National Bank of Kazakhstan cut its base interest rate from 16.25% to 15.75% on October 23, marking its fourth consecutive reduction since June 2026. The central bank has indicated that it may keep the rate unchanged through the end of the year, despite a continued slowdown in inflation.Annual inflation declined to 9.3% in September from 9.8% in August, while households’ inflation expectations fell from 12.1% to 11.8%. According to the National Bank, a stronger tenge and relatively tight monetary policy helped slow price increases. Food inflation declined to 8.5%, while non-food inflation fell to 11%. The base rate had remained at 18% since October 2025. It was lowered to 17% in June 2026, 16.75% in July, and 16.25% in September. The cuts have lowered the base rate by 2.25 percentage points. The base rate influences bank lending costs and deposit yields. Lowering it creates conditions for a gradual reduction in borrowing costs for businesses and households, although commercial banks set their own interest rates based on borrowers’ credit risks and funding costs. Nevertheless, borrowing costs remain high, reflecting the challenges facing Kazakhstan’s economy. Inflation is still almost twice the central bank’s 5% target, meaning prices continue to rise rapidly, even as the pace of increase slows. Meanwhile, strong economic growth has brought limited relief to households: official figures show that real per capita incomes increased by just 0.7% year-on-year in the second quarter. National Bank Governor Timur Suleimenov said that further rate cuts will require a more sustained slowdown in inflation. The central bank identifies rising global energy and food prices, high government spending, and potential increases in regulated utility tariffs among the main risks. Annual inflation could rise slightly toward the end of the year because current prices will be compared with those recorded when Kazakhstan restricted utility tariff increases, from October 2025 to March 2026. However, the National Bank intends to focus primarily on how tariff changes affect other prices rather than responding to the tariff increases themselves. Kazakhstan’s gross domestic product grew by 4.2% in January–September 2026, driven mainly by construction, manufacturing, and transportation. Fixed capital investment increased by 7%, while investment in the non-resource sector, excluding budget funds, rose by 25%. Strong investment activity supports domestic demand while also complicating efforts to bring inflation under control. The National Bank aims to reduce inflation to 6.5–8.5% in 2027 and reach its 5% target in 2028. The next base rate decision is scheduled for December 4.

Growth Forecasts

Central Asia Economic Growth Expected to Slow in 2027

After several years of rapid expansion, Central Asian economies are expected to lose some momentum. The European Bank for Reconstruction and Development (EBRD) forecasts that regional economic growth will slow from 5.8% in 2026 to 5.3% in 2027. However, growth in manufacturing and construction will not necessarily translate into comparable increases in household incomes. The forecast appears in the EBRD’s September report. The bank’s Central Asia figures also include Mongolia, so the regional growth rate should not be interpreted as an average for the five Central Asian countries alone. The Eurasian Fund for Stabilization and Development (EFSD) has published its own projections for Kazakhstan, Kyrgyzstan, and Tajikistan. They differ somewhat from the EBRD’s forecasts but also anticipate continued economic growth. Kyrgyzstan and Tajikistan Maintain Strong Growth The EBRD expects the economies of Kyrgyzstan and Tajikistan to grow by 7% in 2027, the highest rates projected for the five countries in the region. Kyrgyzstan has experienced a construction boom in recent years, driven by investment in roads, housing, and energy infrastructure. The service sector is also expanding. The country’s economy grew by 11.9% in the first half of 2026. However, rapid growth has been accompanied by rising food and fuel prices. The country's performance is closely tied to economic conditions in Russia, where a significant number of Kyrgyz migrant workers are employed and from which Kyrgyzstan imports the vast majority of its fuel. Changes in the Russian labor market can affect remittances and household spending in Kyrgyzstan. In Tajikistan, growth is supported by investment and exports, particularly precious metals and mineral resources. The economy expanded by 8.2% in the first half of 2026. Tajikistan also relies heavily on imported goods and equipment, with spending on imports exceeding export earnings. Remittances from migrant workers in Russia are an even more important source of household income for Tajiks than for their Kyrgyz neighbors, while rising fuel costs are putting additional pressure on family budgets. Kazakhstan Remains Dependent on Oil Exports For Central Asia’s largest economy, the EBRD forecasts growth of 4.5% in 2027, while the Eurasian Fund for Stabilization and Development expects 5%. In 2026, Kazakhstan’s economy has been constrained by disruptions to oil production and exports. Problems arose at the Tengiz oil field and along the Caspian Pipeline Consortium (CPC) export route, through which a significant share of Kazakhstan’s oil reaches global markets via Russia. Meanwhile, Kazakhstan’s factories increased production. But even growth in industries outside the oil sector has yet to eliminate the country’s dependence on commodity exports. For international buyers, the reliability of supply routes is also important. Disruptions to the CPC can restrict Kazakhstan’s oil exports regardless of demand or global prices. The Times of Central Asia recently examined the challenges facing Kazakhstan’s oil logistics. Inflation is another concern. According to the EFSD, prices in Kazakhstan are expected to rise by approximately 9.5% by the end of 2026. This means economic expansion will not necessarily be accompanied by a noticeable improvement in household purchasing power. Uzbekistan’s Growth Driven by...

Economic Growth

Central Asia Growth Forecasts Remain Strong in Latest ADB Outlook

Four of Central Asia’s five economies are expected to grow faster in 2026 than developing Asia and the Pacific as a whole, according to the Asian Development Bank’s September Asian Development Outlook. ADB forecasts growth of 5% across developing Asia and the Pacific this year, compared with 8.9% in Kyrgyzstan, 7% in Uzbekistan and Tajikistan, and 6.3% in Turkmenistan. Kazakhstan is the exception, with growth forecast at 4.8%. Kyrgyzstan is growing faster than its neighbors but is also facing the highest inflation among the five countries. ADB forecasts inflation at 11.2% this year and 8.5% next year. Growth continues to be supported by domestic demand and sustained investment, while ADB says import dependence and electricity-generation shortfalls are contributing to inflationary pressures. For Uzbekistan, ADB forecasts gross domestic product growth of 7% and inflation of 6.7% in 2026. In 2027, the figures are expected to be 6.8% and 5%, respectively. Stronger-than-expected economic activity prompted ADB to upgrade Uzbekistan’s 2026 growth forecast in its September outlook. Tajikistan is also forecast to grow by 7% in 2026, with inflation at 4.5%. Growth is expected to slow to 6.8% in 2027, while inflation is forecast to edge up to 4.7%. ADB lowered its 2026 growth projection in September, saying the escalation of Russia’s war in Ukraine had disrupted fuel imports and constrained near-term economic activity. Kazakhstan, the region’s largest economy, is growing more slowly than its neighbors. ADB expects growth of 4.8% this year and 4.5% next year, with inflation forecast at 10.4% and 9.5%, respectively. The bank left its growth and inflation forecasts unchanged from its previous outlook, with inflation expected to ease only gradually. For Turkmenistan, ADB forecasts growth of 6.3% in 2026 and 6.2% in 2027, with inflation at 6% in both years. The country’s economic indicators remain more difficult to compare with those of its neighbors because of limited access to reliable and detailed economic data. Its economy also remains heavily dependent on natural gas exports, with China its main gas market. Central Asia’s growth figures look strong against the Asian backdrop, but ADB is warning of energy and climate risks across developing Asia and the Pacific. Prolonged disruption to global energy markets could keep oil and gas prices elevated and volatile. For energy importers, that means higher fuel costs and additional inflationary pressure, while hydrocarbon exporters may benefit from higher prices but remain vulnerable to disruption in production and export routes. Another risk is a very strong El Niño, which ADB expects to persist through the first quarter of 2027. Extreme weather could reduce agricultural production and push up food prices, while a decline in hydropower generation could increase demand for other energy sources. For Kyrgyzstan and Tajikistan, where hydropower supplies most electricity, weather and water availability add another layer of vulnerability. The differences between forecasts for the region remain substantial. In August, The Times of Central Asia compared projections from international financial institutions. The Eurasian Development Bank (EDB) forecast 2026 growth of 10.2% for Kyrgyzstan, 8.3% for Tajikistan,...

Inflation

Kyrgyzstan Inflation Hits 12% as Government Plans Food and Fuel Measures

Kyrgyzstan plans to curb rising prices by importing livestock and grain, subsidizing fuel, and increasing domestic food production. The draft plan for 2026-2027 comes after annual inflation reached 12% in August, alongside double-digit economic growth. The Ministry of Economy and Commerce published details of the draft plan on September 21. In 2027, the government aims to keep inflation within 7.7-8.5%. Without additional measures, the ministry estimates that inflation could reach 8.7-9.5% in 2027 because of global prices, external shocks, and supply disruptions. Annual inflation had already reached 11.5% in July, up from 11% a month earlier, before rising to 12% in August, according to the National Statistical Committee. The medium-term target of the National Bank of the Kyrgyz Republic, the country’s central bank, is 5-7%. Much of the plan focuses on food. The state-owned Kyrgyz Agroholding is expected to import at least 20,000 head of cattle from Kazakhstan, Belarus, and Russia, adding at least 2,700 tons of meat to the domestic market. After prices rose in 2025, the authorities imposed limits on the cost of certain types of meat and temporarily banned livestock exports. The draft calls for the construction of four large poultry complexes and 200 livestock facilities with a combined capacity for 10,000 animals. Kyrgyz Agroholding is expected to open 100 direct-sales outlets for meat and agricultural products. The area planted with corn and oilseed crops would be expanded, while 11 trade and logistics centers would be built to store agricultural produce. The draft also calls for flour mills to import 700,000 tons of wheat from Russia and Kazakhstan. The ministry says the imports are intended to ensure that domestic wheat demand is fully covered. The government is also subsidizing fuel. Kyrgyzstan remains heavily dependent on imported petroleum products, with Russia supplying more than 90% of its imported gasoline, meaning higher import costs quickly feed into transportation, food, and service prices. The state compensates importers for part of the difference between purchase costs and regulated retail prices. The subsidies have been extended through December 31, 2026. In Bishkek and the Chuy region, agreed maximum retail prices are 87.9 soms per liter for AI-92 gasoline, about $1; 99.9 soms for diesel; and 48.8 soms for liquefied petroleum gas. Prices are capped at slightly higher levels elsewhere in the country. Without compensation, AI-92 would cost an estimated 111-118 soms per liter and diesel 125-137 soms. A one-year moratorium on increases in a number of regulated tariffs and payments for the population has also been in effect since July 24. High inflation persists alongside rapid economic growth. First Deputy Chairman of the Cabinet of Ministers Daniyar Amangeldiev said GDP had grown by an average of 10.2% annually over the past four years. GDP per capita increased from $1,230 in 2020 to $3,080 in 2025, while the economy grew by another 11% in the first eight months of 2026. In 2025, 1.779 million people, or 24% of the population, remained below the national poverty line, down from 25.7% a year earlier. On...