Uzbekistan sees growth in inflation level

By Azernews

By Kamila Aliyeva

The level of inflation in Uzbekistan during January-September 2017 amounted to 7.8 percent, which is 2.2 percent higher compared to the same period last year.

The average increase in prices for consumer goods in this period amounted to 7.6 percent (in January-September 2016 - 3.3 percent lower), non-food products - 8.6 percent (6.4 percent higher), paid services - 7 percent (7 percent higher), the Uzbek Central Bank said on October 27 with reference to the State Statistics Committee.

The increase in prices, along with monetary factors, was influenced by traditional seasonal fluctuations and supply factors.

The Central Bank decided to leave the refinancing rate unchanged - at the level of 14 percent per annum - "in order to preserve the return on assets in the national currency, to ensure the positivity of real interest rates and to prevent the growth of money supply in the economy." The refinancing rate was raised from 9 percent per annum in June 2017.

Previously, the International Monetary Fund (IMF) stated in its report that Uzbekistan's inflation will grow from 8 percent in 2016 up to 13 percent in 2017. The growth of inflation in 2018 will be at the level of 12.7 percent, according to IMF.

The official data shows that in 2016 inflation in Uzbekistan amounted to 5.7 percent against 5.6 percent in 2015. In 2017, inflation was planned to be kept in the range of 5.7-6.7 percent.

The IMF emphasizes that Uzbekistan can experience inflationary pressures in connection with the currency reform.

The inflation forecast increased under the influence of various factors including the devaluation of the soum. The Central Bank of Uzbekistan devalued the national currency – soum – by almost two times on September 5, setting the official exchange rate of US dollar at 8,100 soums/USD compared to 4,210.35 soums/USD on September 4.

Simultaneously, restrictions were lifted for legal entities and individuals to convert the national currency.

Uzbek President Shavkat Mirziyoyev ordered to remove restrictions from September 5 on currency exchange for the population. Previously, he announced upcoming liberalization of the banking sector and transition to a system of free currency conversion.

Currently, Uzbek people can buy foreign currency solely on plastic payment cards, which can be used abroad without any restrictions. Earlier, individual entrepreneurs and farmers in Uzbekistan were allowed to withdraw foreign currency from their bank accounts.

In addition, legal entities can purchase foreign currency in banks without restrictions for payment on current international transactions - for the import of goods, works and services, repatriation of profits, repayment of loans, travel expenses and other non-trade transfers.

At the time, physical persons can only sell currency to banks through exchange offices.