ANALYSIS: accelerated inflation in Kazakhstan remains the problem in 2009

/REUTERS, Almaty, Tatyana Seroshtanova, June 3, 08/ - Inflation in Kazakhstan can exceed the forecasted by the National Bank level by 10% in 2008; world price growth on main strategic commodities contributes to it, analysts say; according to them, the struggle with inflation will remain one of major objective for government in 2009. On Monday, Statistic Agency published data on inflation, which accelerated to 4.5% for the first five months of 2008 from 3.8% a year earlier because of prices growth on diesel oil and some other foodstuff. "If last year consequences of price growth on food products reflected on Kazakhstan economic in September - October, than this year it will happened in May" - Shamil Dauranov said, the head of managing department on external analysis and forecasting of BTA Bank. GLOBAL PROCESS In annual expression (May 2008 to May 2007) inflation made 19.5% compare to 7.6% a year earlier. In 2007 in inflation in annual expression made record 18.8% for the last years. Accelerated inflation in the country, is firstly connected with growth of world prices on oil, grain and foodstuff. "Growth of prices on primary raw materials and commodities lead to surge of prices on final production, also one of the negative factor is objective of producers and sellers to retain high margin, existing before 2008. Increasing of bank borrowing also lead to price growth for consumers" - Rustem Haliaskarov said, the head of markets and financial products analysis office of ATF Bank department treasury. According to forecast of National Bank and the government, inflation is expected to be on 10.0% level by the end of 2008. "In our opinion, it will be very difficult to restrain inflation within given corridor. More possible range is 11 - 12% APR" - Haliaskarov said. It is said in April analytic report of international Monetary Fund that in countries with forming market, where Kazakhstan is included, the total level of inflation increased more significantly and was conditioned both by stable growth of ask and by heavy weigh of energy suppliers, especially foodstuffs in consumer goods baskets. According to analysts, this inflation process bears global character and growth of inflation will be more depend on balanced world ask and bid on these commodities than on efforts of Kazakhstan government. According to Dauranov, the government and National Bank have already taken a number of measures to soften this process -ban on grain and oil products, monopolists` prices regulation, restriction of foreign borrowings of banks. "However, the total process of world prices growth on basic types of commodities will take place and it will influence growth of inflation" - Dauranov said. According to Statistic Agency data, the highest price growth was fixed in May compare to April of current year on diesel oil - by 8.2%, on rice - by 9.2%, on flour - 3.1%. In total growth of prices on foodstuff has accelerated in 2007 form 7.3% a year earlier to 26.6%. "We need government interference in economic to stop the growth of prices. For example, Anti-monopoly Committee can take definite measures - to set benefits and preferences, usage of which would allow to reduce price pressure" - Dmitriy Kamenev, representative of Alliance Bank considers. Inflation growth will lead not only to depreciation of national currency - tenge, but to decreasing of actual growth of economic and population earnings; also to decreasing of buying ability and consequently to decreasing of consumership and production volumes in main market's segments. "According to our evaluation, inflation growth to 12% from year beginning, in annual expression - 19%, will reduce the total rate of economic growth at the least by 2 - 3%. The struggle against inflation will also be priority-oriented direction of the government in 2009" - Haliaskarov considers. According to analysts, National Bank will have to conduct the policy of "expensive money" and reduce monetary base, which increased from KZT1.53 trl. at the end of April to KZT1.70 trl. by May 30. "National Bank will take all measures to pressing monetary base by means of increasing of refinancing rate" - Dauranov said. Today refinancing rate makes 11.0% APR and was increased from 9.0% since December 1, 2007. Along with this analysts consider that Kazakhstan, as the major deliverer of energy suppliers, ferrous, nonferrous and rare-earth metals, grain can finance all social programs in full-scale. "I.e all disbenefit from import of expensive commodities Kazakhstan should pay for export of mentioned exchange commodities, prices on which grow every day" - Dauranov considers. [2008-06-03]