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BCC Invest analysts expect the year-over-year inflation rate to accelerate in August 2025.
27.08.2025
🔍 Inflation trends: cooling or overheating?
Since the start of the year, inflation dynamics have remained mixed. On the one hand, monetary policy has begun to take effect: after the base rate was raised to 16.5% in March and kept unchanged for the third time in July, monthly inflation shows signs of slowing. On the other hand, the still-elevated annual inflation rate indicates the lingering impact of past price shocks.
📉 Monthly inflation forecast:
Optimistic scenario — 0.6%;
Base scenario — 0.7%;
Pessimistic scenario — 0.8%.
📈 Annual inflation forecast:
Optimistic scenario — 11.8% y/y;
Base scenario — 11.9% y/y;
Pessimistic scenario — 12.0% y/y.
Thus, even if monthly inflation moderates, the y/y indicator will continue to rise, keeping the National Bank further from its 5% target.
📊 Inflation components in August 2025:
Food: 11.8% y/y (July — 11.2%);
Non-food goods: 9.5% y/y (July — 9.5%);
Services: 14.7% y/y (July — 14.9%).
🛠️ Containment tools: The increase in the base rate is already exerting a cooling effect, but actual inflation is still far from target, and changes to the Tax Code have not yet had a tangible impact in easing price pressures.
💵 Exchange rate and inflation expectations: The average rate in August was about 539 KZT per US dollar, consistent with BCC Invest’s base-case FX scenario (538.5 KZT per USD). You can find more details in the Analytics → Kazakhstan section on our website.
At the same time, intramonth FX volatility remained elevated: in early August the rate reached 543.2 KZT per USD, then gradually appreciated to 533.9 KZT by August 27. The initial spike lifted inflation expectations among businesses and households, while the subsequent correction partly eased tensions. Nevertheless, exchange-rate pass-through operates with a lag, so its residual impact will surface in the autumn monthly prints—especially in non-food goods and services with high import content.
⚠️ Backdrop: overheating and transfers. In January–June 2025, the economy grew 6.2% y/y—well above the “normal” range of around 4% for Kazakhstan that we emphasized in our macro overview 2025 (dated January 24, 2025). The fiscal impulse remains significant: 66.2% of the annual transfer envelope from the National Fund has already been used; the 2.0 tn KZT guaranteed transfer is fully exhausted, and 45.4% (1.475 tn KZT) of the targeted transfer has been utilized. This combination sustains business activity but also pushes up inflation expectations and limits the pace of disinflation.
Given these factors and the profile of monthly inflation, our base-case monetary-policy view is unchanged: the National Bank will keep the base rate at 16.5%. This decision aligns with the strategy and is necessary to steer average monthly inflation toward roughly 0.4%. Risks are skewed toward tighter policy, primarily due to the food component and potential supply shocks, as well as renewed pressure on the exchange rate; conversely, FX stabilization and a cooling in domestic demand would reinforce the disinflationary trend.
P.S. To achieve the inflation goal, the regulator must avoid a renewed price acceleration: keep real rates in positive territory, align expectations with the target trajectory, and improve the predictability of the fiscal impulse. Under these conditions, monthly inflation can settle closer to 0.4%, and the y/y rate may start to turn down after the unfavorable autumn base passes.
