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Inflation

Kazakhstan’s Central Bank Raises Inflation Forecast for 2025-2026

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.

Economy

IMF Links High Inflation in Kazakhstan to Overheating Economy

The International Monetary Fund (IMF) has attributed rising inflation in Kazakhstan to signs of an overheated economy. In a mission conducted in early November, the IMF concluded that the country's GDP growth is exceeding its real potential, thereby fueling inflationary pressure. While economic activity remains robust, prices continue to climb. According to the IMF’s forecast, Kazakhstan’s real GDP is expected to grow by just over 6% in 2025, up from 5% in 2024. The main growth drivers are increased oil production and elevated domestic demand. The IMF estimates that inflation could reach nearly 13% by the end of the year. Kazakhstan’s fiscal policy remains expansionary. Transfers from the National Fund are a key contributor: in 2024, more than $12.1 billion was withdrawn from the fund, including $10.8 billion in direct transfers to the republican budget and $1.3 billion for the purchase of shares and bonds of Kazakhstani issuers. In 2025, the government plans to cut withdrawals from the National Fund nearly in half to $5.2 billion. However, the IMF warns that the non-oil budget deficit could still exceed 8% of GDP. Elevated demand, particularly from state-owned enterprises, has also contributed to a widening current account deficit, projected at 4% of GDP. Despite a slowdown in consumer lending and stabilization in oil production, domestic demand is expected to remain high in 2026. The IMF forecasts GDP growth at 4.5%. Over the medium term, the new Tax Code is expected to help bring inflation down to the 5% target, while GDP growth moderates to a sustainable level of around 3.5%. According to the National Statistics Bureau, year-on-year inflation in Kazakhstan stood at 12.9% in September 2025, easing slightly to 12.6% in October. Monthly inflation was reported at 0.5%. The IMF highlighted several risks that could exacerbate inflationary pressures. These include falling oil prices, slower economic growth among key trading partners, potential disruptions to crude exports via the Caspian Pipeline Consortium (CPC), delays in infrastructure projects, and sluggish fiscal consolidation. Nevertheless, Kazakhstan continues to maintain one of the lowest levels of public debt in the world. At 24.8% of GDP, the country ranks 25th globally in terms of debt burden.

National Bank

Kazakhstan’s Central Bank Raises Base Rate to 18% Amid Surging Inflation

The Monetary Policy Committee of the National Bank of Kazakhstan has raised the base rate to 18% per annum, with a corridor of +/- 1 percentage point, in an effort to contain accelerating inflation and stabilize macroeconomic conditions. "The easing of monetary conditions amid accelerating inflation, signs of demand outpacing supply growth, and an active fiscal policy required a significant response to stabilize inflation dynamics and prevent the risk of an inflationary spiral," the central bank said in a statement. According to the National Bank, inflation in Kazakhstan is rising across all major components. Annual inflation reached 12.9% in September, surpassing expectations. Food prices remain the primary contributor (up 12.7%), while non-food inflation is also accelerating (10.8%). "Inflation expectations among the population over a 12-month horizon remain elevated and volatile, with continued uncertainty in assessments. Market professionals have revised their inflation forecasts for the year from 11.3% to 12%. External inflationary pressure remains persistent. Risks are mounting, especially from global food markets, where record price increases have been observed in categories such as meat and vegetable oils. These dynamics, coupled with active exports, are feeding into higher domestic prices," the statement noted. In response to inflation exceeding projections, the Committee opted to tighten monetary policy by raising the base rate. It also signaled that further tightening may be considered if current measures prove insufficient. Economists are raising concerns as the country enters what they describe as a "phase of expensive money." According to a recent report by the Analytical Center of the Association of Financiers of Kazakhstan (AFK), banks are hiking interest rates, margins are narrowing, and access to credit for both households and businesses is declining. After a local peak of 7.1% in the first quarter of 2025, the real interest rate dropped sharply to 3.6%. With the base rate held steady, rising inflation eroded returns on tenge-denominated assets and weakened incentives for investment. The combination of a spring rate hike and rising inflation has hit deposit rates the hardest, which are growing faster than lending rates. The spread between corporate loan and deposit rates fell from 4.1% to 3.6%, while the spread for retail products narrowed from 7.8% to 6.7%. "Banks are operating under conditions of rising funding costs. The cost of attracting funds is increasing, while returns on loans are not keeping pace. This is squeezing margins and prompting banks to adopt a more cautious lending policy," the AFK report stated. The Times of Central Asia previously reported that inflation continues to exceed official forecasts. In August, annual inflation stood at 12.2%, and it is projected to reach 14% by the end of 2025, well above the National Bank's target range of 5-6%. Economists point to Kazakhstan’s reliance on imports, including food, fuel, medicine, equipment, and consumer goods, as a key driver of inflation. Wage and pension growth have failed to keep up with rising prices.

Inflation

Experts Say Kazakhstan Must Boost Manufacturing to Tame Inflation

Inflation is steadily eroding incomes in Kazakhstan, depleting savings and undermining government efforts in the social sector. The Times of Central Asia previously noted that surging economic growth could be a contributing factor to Kazakhstan’s inflation problem. But despite rising prices, the government has no plans to apply the brakes. On the contrary, officials point to promising GDP growth driven by sectors beyond oil. Meanwhile, independent experts argue that only large-scale industrial development can provide a lasting solution to inflation. Persistent Price Pressures Inflation continues to outpace official projections. In August, annual inflation hit 12.2%, and by the end of 2025 it is expected to reach 14%, well above the National Bank of Kazakhstan’s target range of 5-6%. Economists say the country’s dependence on imports is a key driver. Kazakhstan imports large volumes of food, fuel, medicine, equipment, and consumer goods. Wage and pension increases are failing to keep pace with the surge in prices. President Kassym-Jomart Tokayev has acknowledged that high inflation poses a serious challenge, warning it is “eating away at economic growth and household incomes.” Government efforts to stabilize prices have yet to show meaningful results. On September 23, Minister of Trade and Integration Arman Shakkaliev announced that Kazakhstan will gradually phase out price controls on socially significant food products (SZPT) in favor of targeted digital support for consumers. The SZPT list currently includes 19 essential items. At the same time, Prime Minister Olzhas Bektenov instructed agencies to crack down on unjustified price hikes for basic goods, ordering strict enforcement of available price control tools. Growth at a Cost Inflation, according to Deputy Prime Minister and Minister of National Economy Serik Zhumangarin, is being fueled by economic expansion. He warned that efforts to restrain inflation could hinder growth. “Since 2023, GDP has grown by 5%, and in 2024 we grew without the contribution of oil. This year is a turning point. From 2026, oil will no longer influence GDP growth,” Zhumangarin said. Although Kazakhstan’s economy has long relied on oil revenues, the minister believes this trend is now shifting. “Economic growth is always accompanied by high inflation,” he said. “More than $12 billion in investments have already been attracted, and the target for the year is $24 billion. The government will soon announce a new strategy for economic growth. We must follow the path of Asian countries but with modern technologies.” Call for Industrialization Independent analysts argue that real progress against inflation requires mass domestic production across a wide range of goods. Political analyst Gaziz Abishev stressed the urgency of moving beyond megaprojects toward practical, infrastructure-linked industry. “Kazakhstan needs real production, not fairy-tale megaprojects. Industry tied to infrastructure, logistics, human resources, and markets solves many issues,” he wrote. “It creates well-paid jobs, stimulates small and medium-sized businesses, reduces reliance on imports, supports the tenge, and addresses budget deficits.” Abishev also called for openness to foreign industrial investment, regardless of origin. His comments appear to push back against public concerns over the influence of Russia, China, and Western...

Inflation

Inflation in Kazakhstan “Eating Away” at Incomes: Authorities Struggle for Answers

Inflation in Kazakhstan is continuing to erode household incomes, driven by the country’s dependence on imports, rising utility tariffs, and increasing tax burdens. While living costs soar, wages remain sluggish, forcing many families to allocate most of their earnings to essentials such as food, medicine, and utilities. Rising Prices, Stagnant Wages As of August, annual inflation had reached 12.2%, and experts warn it could climb even higher by year’s end. The National Bank’s original 2025 inflation target of 5% has proven to be overly optimistic. “This is a negative, sad trend. It shows that not enough measures have been taken. That it was necessary to tighten monetary policy earlier. It was necessary to contain inflation risks,” said Ramazan Dosov, chief analyst at the Association of Financiers of Kazakhstan. The National Bank’s base rate, its primary instrument for controlling inflation, currently stands at 16.5%. Financier Rasul Rysmambetov notes that the rate is unlikely to be lowered in the near future. However, high interest rates also reduce access to loans for businesses, curbing investment. Despite frequent government statements about inflation-control measures, experts argue that artificial price regulation offers only temporary relief. In his September 8 address to the nation, President Kassym-Jomart Tokayev acknowledged the severity of the issue, stating, “Today, the main problem is high inflation, which is eating away at economic indicators and household incomes. There is no ready-made solution to this problem.” Tokayev called for coordinated efforts across government agencies. At the beginning of 2025, Kazakhstan’s average monthly salary was reported at 424,200 KZT (about $800), reflecting a 24% increase over the previous year. However, this figure obscures wide regional disparities. In many areas, typical monthly salaries range between 180,000 and 230,000 KZT ($330-430). Per capita income reached 194,000 KZT ($362), up 17% from early 2023, but not enough to keep pace with inflation. According to kazkredit.kz, average families now spend up to 95% of their income on day-to-day expenses. In 2023, 52% of income went toward food; that figure has risen to more than 54% in 2025. Halyk Finance, cited by inbusiness.kz, reports that more than half of Kazakhstan’s workers earn below the national average. Salary data reveals stark income inequalities across sectors, with higher wages in mining, finance, and telecommunications, and significantly lower wages in agriculture, healthcare, and public administration. Analyst Arslan Aronov notes that although nominal wages increased by 11.3% in the second quarter of 2025 compared to the same period in 2024, real wage growth was effectively zero due to inflation. Public sentiment reflects the strain. Economists at KZTnomika reported a slight easing of inflation expectations in August 2025, but overall confidence in price stability remains low. Eighty-two percent of survey respondents reported rising food costs, with meat and dairy products leading the list. Among non-food items, medicines, clothing, and cleaning products were most frequently cited. For paid services, rising costs for housing, internet, mobile communication, and healthcare were prominent concerns. Background and Analysis Kazakhstan’s struggle with inflation is rooted in both external shocks and structural...

Growth Forecasts

ADB Raises Kazakhstan’s Economic Growth Forecast, Warns of Higher Inflation

The Asian Development Bank (ADB) has revised upward its economic growth forecast for Kazakhstan for both 2025 and 2026, while also raising its inflation projections. The updated outlook was published in the July edition of the Asian Development Outlook. Growth Outlook Strengthened According to the ADB’s latest report, Kazakhstan’s GDP is now expected to grow by 5.1% in 2025, up from the 4.9% forecast issued in April. The projection for 2026 has also been increased from 4.1% to 4.3%. Key growth sectors include: Transport: +21% Construction: +16.9% Manufacturing: +8.7% Mining: +6.1% Particular emphasis is placed on the early expansion of oil production at the Tengiz field, which launched ahead of schedule. This, combined with Kazakhstan’s increasing oil exports within the framework of OPEC+ quotas, has bolstered the growth outlook. As previously reported by The Times of Central Asia, in June, Kazakhstan raised production for the third consecutive month, contributing positively to GDP growth. "Growth in tax revenues has allowed for increased government investment in capital projects and the social sector," the ADB commented. "The early launch of the Tengiz expansion has strengthened prospects for the extractive industry. OPEC+'s May 31 decision to continue raising production supports this trend, as Kazakhstan is utilizing its full capacity." Inflation Pressures Intensify Despite the improved growth outlook, the ADB now expects inflation to reach 10.2% by the end of 2025, up from the 8.2% forecast in April. For 2026, inflation is projected at 8.4% (previously 6.5%). Data from Kazakhstan’s National Statistics Bureau indicates that annual inflation reached 11.3% in May and 11.8% in June. Paid services remain the primary inflation driver, though monthly price increases slowed modestly from 0.9% in May to 0.8% in June. The ADB notes rising inflationary pressure across the broader Caucasus and Central Asia subregion. The regional average is now expected to hit 7.8% in 2025 and 6.7% in 2026 both higher than the previous forecasts of 6.9% and 5.9%, respectively. Supporting Forecasts The Eurasian Development Bank (EDB) also anticipates robust economic expansion in Kazakhstan, projecting GDP growth of 5.5% in 2025, up from 4.8% in 2024, with sustained momentum through 2026-2027. However, the EDB likewise foresees persistent inflation, expecting it to reach 11.9% by year-end. Earlier, Deputy Prime Minister Serik Zhumangarin reported that the Kazakh economy grew by 6.2% in the first half of 2025, the country’s fastest growth rate since 2011.