Vegetable prices of significant societal value decreased in Kazakhstan
Kazakhstan's Food Production Soars, but Inflation Remains High
In the first half of 2025, Kazakhstan's food production surged by 10%, reaching KZT 1.8 trillion (approximately $3.4 billion), according to a recent report. This impressive growth, which surpassed official targets, accounted for 17.2% of total manufacturing output, making it the second largest sector behind metallurgy and mechanical engineering.
The growth in food production was driven by government support measures such as subsidies for transporting agricultural raw materials, VAT cuts on selected food products, and preferential loans. Specific product categories with notable increases included fish products (+34.4%), vegetable oil (+20.3%), sausages (+10.8%), and butter (+10.4%). However, cereal production declined due to seasonal factors, and some regions saw drops in confectionery, canned goods, and dairy products due to raw material and market issues.
On the flip side, Kazakhstan has been grappling with accelerating inflation. The annual inflation rate rose from 10.7% in April to 11.8% in June, the highest point since September 2023. Inflation was mainly driven by faster price increases in food products (10.6% year-on-year in June), paid services, and to a lesser extent, non-food products.
A meeting chaired by Vice-Premier and Minister of National Economy Serik Zhumanjarov discussed the results of inflation for the first half of the year. The government decided to adjust the pace of increases in utility tariffs, partially shifting their growth to later dates, in an effort to help reduce the financial burden on citizens and stabilize inflation rates.
In comparison, Kyrgyzstan showed robust economic growth (~12% in the early 2025 months) and headline inflation returning to a target range of 5-7% by early 2025, with core inflation declining to 6% by March 2025. This indicates Kyrgyzstan has comparatively lower inflation and stronger growth dynamics than Kazakhstan, at least in early 2025.
The summary table below compares key indicators between Kazakhstan and Kyrgyzstan for the first half of 2025:
| Indicator | Kazakhstan | Kyrgyzstan | |------------------------|---------------------|----------------------------| | Food production growth | +10% YTD (1H 2025) | Not specified | | Inflation rate | 11.8% annual (June) | 5-7% headline (early 2025) | | Key inflation drivers | Food products, paid services | General inflation control | | Economic growth | Not quantified here | ~12% early 2025 |
In conclusion, Kazakhstan's food production is growing strongly but inflation is relatively high compared to Kyrgyzstan and possibly other EAEU countries, where inflation appears more controlled. Kazakhstan's inflation pressures mainly stem from food prices despite strong domestic food production growth supported by government interventions.
Finance ministers in Kazakhstan may consider implementing stricter monetary policies to curb inflation, focusing on controlling food-and-drink costs to align with the lifestyle of the average citizen. Meanwhile, investment opportunities in the food production sector, which has proven to be a leading contributor to Kazakhstan's economy, will continue to attract finance in the pursuit of sustainable growth.
