According to the Committee on Statistics, inflation in 2017 (December 2017 compared with December 2016) was 7.1%. Prices for food products increased by 6.5%, non-food products - by 8.9%, paid services - by 5.9%. Figure 1 shows the dynamics of the inflation rate for the period 2012-2017. During the period under review, the highest level of inflation was recorded in 2015, due to the National Bank's transition to the inflation targeting regime.
Figure 1. The inflation rate in Kazakhstan in 2012-2017, as of the end of the period, in percent to December of the previous year
It is worth noting that the increase in inflation in 2014-2015 was predetermined by the devaluation of the national currency. During the period under review, it took place two times in Kazakhstan: the first in February 2014, and the second in August 2015, after which the National Bank decided to switch from the currency corridor to the freely floating exchange rate in the inflation targeting regime. The main feature of this regulation is that under this regime of the monetary policy a special target inflation baseline is established, the achievement of which in the medium term is mandatory for monetary regulatory authorities. The main characteristics are also the absence of other primary goals for the implementation of the monetary policy, the independence of the Central Bank (in Kazakhstan - the National Bank) in the choice of instruments for the monetary regulation and, most importantly, the transparency and accountability of the central bank to society.
The regime of inflation targeting for today is recognized as one of the most effective in the fight against inflation. It should be noted that the supporters of this policy are becoming more and more, both in developed and developing countries. New Zealand and Canada were the first, followed by the United Kingdom, Finland, Sweden, Australia and Spain. Since 1999, the Central Bank of Europe has been using inflation targeting. A number of studies conducted to assess the effectiveness of this method have confirmed the positive effect of this policy. M. Vega and D. Winkelried found that inflation targeting helped to reduce the level and volatility of inflation in the countries where it was introduced. In turn, Orphanides and Williams showed that a systematic approach to the policy of inflation targeting makes it predictable and allows to exert a stronger influence on expectations.
Within the framework of inflation targeting, the National Bank of Kazakhstan is implementing measures aimed at achieving the medium-term goal of slowing inflation to 4% or lower by 2020. To achieve this goal, intermediate targets were identified. So, in 2017 it was planned to fix the annual inflation rate in the corridor from 6 to 8%. As a result, the annual inflation rate was 7.1% and entered the target inflation corridor. In 2018, the National Bank set a target for inflation at a lower value - from 5 to 7%, in 2019 this figure is expected to be contained within 4-6%. According to the Ministry of National Economy of Kazakhstan, inflation for the first three months of 2018 was 1.8% (Q1, 2017 - 2.3%). Annual inflation in March slowed to 6.6%, which is included in the inflation corridor set by the National Bank.
Chairman of the National Bank of Kazakhstan Daniyar Akishev noted that among the risks that may lead to failure to achieve inflation targets, one should be noted - the shocks of supply in certain markets for goods and services, the strengthening in response to shocks of inflationary expectations of the population, stimulation of consumption at the expense of budgetary, borrowed resources or lending, which will lead to an increase in import revenues without the development of domestic production.
Now let's analyze the dynamics of the inflation rate in relation to December 2012 to determine how much the prices for the main groups of consumer goods and services have changed in 2017. We will accept 2012 for the base (2012 = 100) and calculate the indices of consumer prices. Thus, compared to 2012, the price level in Kazakhstan in 2017 increased by 48.6% (Table 1, Fig.2). During the period under review, the greatest increase in prices is observed for goods and services in health care (medicines, outpatient services) - 78.3%, for clothing and footwear - 75.4%, for alcoholic beverages and tobacco products - 70.8%, for household items usage - 63,9%. The lowest price growth was recorded for postal services, telephone and facsimile services - 13.2%.
Table 1. The consumer price index in Kazakhstan in 2012-2017, at the end of the period, in percentage terms
Figure 2. The consumer price index for the main groups of goods and services in Kazakhstan in 2017, as a percentage of December 2012 (2012 = 100)
The main source of income for wage earners in Kazakhstan is a wage. Therefore, we similarly analyze the index of nominal wages in relation to 2012 in order to correlate the change in the level of prices and wages in Kazakhstan. In relation to 2012, the nominal wage of one employee in 2017 increased by 48.2%, which practically corresponds to the change in the price level for the period under review (Table 2, Fig.3). At the same time in 2013, 2014, 2016 the index of nominal wages outstripped the CPI, in other words the nominal income grew faster than prices.
Table 2. The index of nominal wages of one employee in 2012-2017, for the year (January-December)
Figure 3. The ratio of the consumer price index and the nominal wage index in Kazakhstan in 2013-2017, at the end of the period, in percentage terms to December 2012
During the period under review, the nominal wage index lagged far behind the CPI only in 2015, when in the period of high inflation population's money income grew more slowly than prices. Accordingly, real incomes of the population decreased, which is demonstrated by the real wage index, which is calculated as the ratio of the nominal wage index to the CPI (Table 3). So, in 2015, real incomes fell by 2.4% compared to the previous year.
Table 3. The index of real wages of one employee in 2012-2017, for the year (January-December)
Table 3 also shows the calculation of the real wage index in relation to 2012, which demonstrate the change in the indicator. In 2013-2016 real incomes of the population compared to 2012 increased by 1.6%, 5.6%, 3% and 2.1% respectively. In relation to 2012, the real wages of one employee in 2017 did not change. Thus, for the period under review, the change in the level of wages corresponds to a change in the level of prices in the national economy.
The dynamics of the inflation rate for the period 2012-2017 had a multidirectional trend. Until 2015, there was an increase in the price level, then after the National Bank moved to the inflation targeting regime, the price increase began its rapid decline. So, in 2017 it was planned to fix the annual inflation rate in the corridor from 6 to 8%.
Along with the rise in the price level, there was an increase in nominal wages and, accordingly, income. As the analysis showed, in certain years, with the exception of 2015, population's money incomes exceeded the level of inflation or corresponded to its level. The policy of inflation targeting in conjunction with measures of the state social policy to increase the salaries of employees of budgetary organizations contributed to the preservation of the level of the well-being of the population.
experts of "Parasat" Institute for System Studies