The Asian Development Bank (ADB) revised its inflation projections for Kyrgyzstan, reflecting slight reductions for 2024 and 2025, following a sharper-than-expected decrease in inflation in 1H24. The ADB anticipates an inflation rate of 6.8% for 2024, down from the previous estimate of 7% issued in April. Additionally, the forecast for 2025 has been adjusted to 6.2%, compared to the earlier prediction of 6.5%.
In its report, the ADB highlighted that inflation across all major categories in Kyrgyzstan has decelerated during 1H24, with significant improvements noted in food prices. Average annual inflation fell from 12.7% in 1H23 to 5.1% in 2024. By June 2024, y/y inflation had decreased to 4.5%, while core inflation experienced a similar decline, dropping from 13.7% to 5.8%.
The slowdown in inflation is attributed to various factors, including lower import prices, enhanced supply of essential goods, a stronger local currency, and the delayed impact of previous monetary tightening actions. Food prices, in particular, exhibited minimal growth, increasing by only 1%.
Despite the observed improvements, the ADB cautioned that inflationary risks remain. These include fluctuations in global food and energy prices, potential currency depreciation, persistently high inflation expectations, and strong demand pressures that could influence future inflation trends in Kyrgyzstan.
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