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Annual inflation slowed for the twelfth consecutive month in September. The rate declined from 9.8% (YoY) to 9.3% (YoY), while monthly inflation remained unchanged at 0.6% (MoM). A high base of comparison contributed to the slowdown in annual inflation. Core inflation also eased, from 10.7% (YoY) to 10.2% (YoY), indicating weaker inflationary pressures.
Household inflation expectations declined but remain elevated. Expectations for the next 12 months fell from 12.1% to 11.8%, their lowest level since February 2022, while five-year expectations declined from 13.7% to 12.7%. Long-term expectations exceeding short-term expectations may indicate that inflation expectations remain insufficiently anchored.
AERC expects cautious cuts in the base rate to continue. A reduction of 0.25 percentage points, from the current 16.25% to 16.0%, is forecast at the 23 October meeting. With annual inflation at 9.3%, this would bring the real base rate to 6.13%. The median forecast among professional market participants places the base rate at 15.9% at the end of 2026.
The tenge continued to appreciate against the currencies of Kazakhstan’s main trading partners. In September, the average monthly USD/KZT exchange rate fell by 3.2% (MoM) to KZT 449.75 per US dollar, while the RUB/KZT rate declined by 5.4% (MoM) to KZT 5.28 per ruble. US dollar trading volumes increased from $8.7 billion to $10.4 billion. Foreign currency purchases for the Unified Accumulative Pension Fund (UAPF) almost offset sales by the National Bank of Kazakhstan (NBK), leaving net foreign currency supply from NBK operations close to zero.
External inflationary factors remain mixed. Monthly inflation accelerated in Russia and the euro area in September but slowed in China. The FAO Food Price Index increased by 2.0 points to 136.0 points, partly reflecting higher cereal prices amid logistical constraints in the Black Sea region. Meanwhile, the appreciation of the tenge helps reduce import costs in domestic currency terms and contain imported inflation.
AERC forecasts a further slowdown in annual inflation following a slight uptick in October. Monthly inflation is forecast at 0.64% (MoM) in October, with annual inflation at 9.38% (YoY). In the following months, a high base of comparison is expected to support a decline in annual inflation to 8.77% (YoY) in January 2027, when monthly inflation is projected at 0.71% (MoM).
New lending is shifting towards businesses. In January-August 2026, loan disbursements to businesses increased by 19.6% (YoY), while those to households declined by 3.7% (YoY). Household loans accounted for 57.4% of the banking sector’s outstanding loan portfolio.
Read more in the Monetary Snapshot.
