Inflation and Inflationary Expectations


Inflation is an overall increase in the price level of goods and services. The inflation is affected by a lot of internal and external factors including the level of business activity, output gap (the gap between actual GDP and its potential level), labor productivity, household cash income, employment rate, the extent of market competition, adequate supply of goods and services, prices in the global commodity markets and other factors.

To calculate the inflation, the consumer price index (CPI) is used; it is an indicator of an overall change in prices of goods and services purchased by the population for consumption (basket of consumer goods and services). The basket reflects the structure of household spending and includes goods and services which comprise the largest relative share in the household consumption. The CPI is calculated as the cost of consumer basket in the current period relative to some base period.

The CPI is calculated by the Bureau of National statistics of the Agency for Strategic planning and reforms of the Republic of Kazakhstan.

Inflationary Expectations

Inflationary expectations reflect assumptions of the population and of the market participants regarding a future inflation pattern.

Assumptions regarding a possible inflation pattern in future have impact on the economic activity of the population and the market. If inflationary expectations are low, the market participants will be trying to invest their money into the production, investment projects, and financial operations. If inflationary expectations are high, then the market participants will be investing their money into goods, real estate, stable foreign currency as well as other valuables whose cost does not depend on the inflation rate in the country.

Since January 2016, the public opinion polls have been conducted to measure inflationary expectations in Kazakhstan. A monthly poll is conducted among the adult population via a telephone interview, with 1500 respondents participating. The representativeness of the sample is provided by the division of respondents into such categories as the region (all regional centers, also Astana, Almaty, Semey cities), age and employment. The number of respondents in each category is close to the data according to official statistics of the Republic of Kazakhstan.

The quantitative assessment of the forming households’ expectations is realized through the usage of the quantification, i.e. transforming the survey results to the numerical value by constructing the corresponding indexes with the use of the probability method.

Inflation expectations

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