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Inflation in Kyrgyzstan to reach 10-12 percent at year-end 2023

Despite the high base due to abnormally high rates of price growth during 2022, the inflation rate (December 2023 to December 2022) is predicted in the range of 10-12 percent. The report on monetary policy of the National Bank of Kyrgyzstan says.

It is noted that this is due to continued high inflation expectations and depreciation of the exchange rate of the som against the U.S. dollar since the beginning of 2023.

«Despite the expected decline in prices in the global food market in the short term, food part of inflation will have a significant impact on price growth in Kyrgyzstan during 2023. This is primarily due to unfavorable climatic conditions, as a result of which the agricultural sector has a problem with a shortage of irrigation water compared to last year,» the bank notes.

The forecast for non-food inflation remains at moderately high values (about 12 percent on average in 2023) with a gradual decline by the end of 2024. In the bank’s current forecast, the contribution of administrative prices has increased due to relatively high actual increases in electricity (in May 2023), heating and hot water tariffs (in June 2023) compared to expectations in the previous forecast round.

«Taking into account the monetary policy pursued by the National Bank and with the development of the situation in accordance with the base case scenario forecast, annual inflation will return to the target of 5-7 percent by the end of 2025,» the statement says.