National Bank raises inflation forecast amid rising prices for imported goods

The National Bank of Kyrgyzstan (NB KR) has published its monetary policy report for the second quarter of 2025. The document notes that the country's economy is growing rapidly, but inflationary pressures are intensifying, mainly due to external factors.

In the first half of the year, Kyrgyzstan's real GDP increased by 11.4%. The main drivers of growth are construction, services and industry. The economy is supported by growth in real incomes of citizens and an increase in remittances from abroad, which grew by 26.2% in six months.

While inflation remained within the target range (up to 7%) at the beginning of the year, price growth accelerated in May. At the end of June, annual inflation stood at 8%. By the end of 2025, the forecast has been raised to 8.5–9%.

The main reasons for the acceleration in price growth were the rise in food and raw material prices on world markets, as well as rising inflation among Kyrgyzstan's trading partners. In Kazakhstan, it stood at 11.8%, in Uzbekistan at 8.7%, and in Russia at 9.4%. This directly affects the cost of imported goods.

A separate factor is the rise in fuel prices. Due to price instability on world markets and repairs at Russian oil refineries, petrol has risen in price by 3.9% since the beginning of the year, and diesel fuel by 3.4%. This leads to an increase in logistics costs and a rise in the price of part of the consumer basket.

Food products rose in price the most in the second half of the year: meat, bakery products, oils, fats and sugar.

The impact of domestic factors, such as growth in consumer demand and the annual review of electricity tariffs, is assessed as moderate.

The key rate of the National Bank of the Kyrgyz Republic remained at 9% in the second quarter and was raised to 9.25% at the end of July. The regulator also supports the stability of the som, manages liquidity and builds up international reserves.

The National Bank's goal is to keep inflation within the range of 5-7% in the medium term, despite increased external pressure.