In 2021, almost the entire world faced the problem of accelerating inflation. Unfortunately, this situation is the flip side of the coin of quite positive things, such as fiscal stimulus measures, soft monetary policies of central banks, as well as the rapid recovery of the economy after the "crown crisis," reports ranking.kz.
Regulators and international organizations initially viewed the price acceleration as a temporary phenomenon. But as inflation reached record highs, even in developed countries, and pro-inflationary risks persisted, global price increases became sustainable. Today the efforts of central banks are aimed at creating conditions for a steady decline in inflation.
Inflation processes in the EAEU countries were broadly similar. In some countries, inflation halted growth by the end of 2021 and began to decline, but still remains high, significantly exceeding the target benchmarks of central banks. Accordingly, monetary regulators, in their turn, continue to tighten monetary conditions.
The biggest inflation surge over the past year among the EAEU countries was observed in Armenia. Inflation accelerated from 3.7% in December 2020 to a peak of 9.6% in November 2021, and at the end of December was at 7.7%. In January of this year, the indicator continued to decline, amounting to 7.1%. Given the continued high inflationary environment caused by external pro-inflationary pressure, the Central Bank of Armenia continued to tighten its monetary policy, raising its refinancing rate in February 2022 by 0.25 ppt, to 8% (in 2021 the rate was increased by 2.5 ppt, to 7.75%).
At the same time, at the end of 2021 the highest inflation rate, despite its decline in the second half of the year, was formed in Kyrgyzstan - 11.2% (in December 2020 - 9.7%). With the acceleration of inflation since May 2021 and reaching a peak of 14.6% in July, the discount rate of the National Bank of Kyrgyzstan for the year was increased by a total of 3 percentage points, to 8%. In January, the regulator decided to raise the rate by another 0.5 p. p., to 8.5%. The decision was made to minimize the negative effect of external shocks on the current dynamics of inflation and inflation expectations.
In Kazakhstan, there was an increase in prices from 7.5% to 8.4%. In November-December 2021, against the background of anti-inflationary measures taken by the government, in particular on socially important food products, inflation began to decline from its peak of 8.9%. However, in January of this year, the index rose again, amounting to 8.5%. The National Bank, in turn, notes the volatility of the decline in inflation, dictated mainly by administrative containment of prices. In this regard, the regulator decided to increase the prime rate to 10.25%, which, according to estimates, will help slow inflation to 6-6.5% by the end of this year.
Despite the different dynamics of inflation at the end of 2021 and in the current year, all regulators of the CIS and EAEU countries note the preservation of stable proinflationary pressure and express their readiness to tighten monetary policy in case of strengthening of proinflationary risks.