Kyrgyzstan’s inflation rate accelerated to 9.30% YoY in November 2025, marking the highest reading since September’s 9.50%. This rise contrasts with a downward trend observed earlier in the year, when inflation hovered near 6.90% in April. The current inflation exceeds the National Bank of Kyrgyzstan’s target range of 5-7%, raising concerns about sustained price pressures. The increase reflects a combination of domestic supply constraints, rising food and energy costs, and external shocks.

Drivers this month

• Food prices contributed approximately 0.40 percentage points, driven by higher grain and vegetable costs.
• Energy inflation added 0.30 percentage points, reflecting global oil price volatility.
• Core inflation components, excluding volatile food and energy, rose by 0.20 percentage points, indicating broader price pressures.

Policy pulse

The inflation rate now sits well above the central bank’s 5-7% target, pressuring monetary authorities to consider tightening measures. The National Bank has maintained a policy rate of 12% since mid-2025 but may signal further hikes if inflation persists above 8%.

Market lens

Immediate reaction: The Kyrgyz som (KGS) depreciated 0.40% against the US dollar within the first hour post-release, reflecting investor concerns over inflationary risks. Short-term government bond yields rose by 15 basis points, while breakeven inflation rates in local markets edged higher.

Examining core macroeconomic indicators alongside inflation provides a fuller picture of Kyrgyzstan’s economic health. GDP growth for Q3 2025 was reported at 3.20% YoY, slightly below the 3.50% average for the past two years. Unemployment remains stable at 6.50%, but wage growth has accelerated to 7.10%, feeding into consumer price pressures.

Monetary Policy & Financial Conditions

The National Bank’s policy rate of 12% remains one of the highest in the region, reflecting efforts to anchor inflation expectations. Credit growth slowed to 9% YoY in October, down from 12% earlier in 2025, indicating tighter financial conditions. The banking sector’s non-performing loans ratio remains manageable at 4.20%, supporting financial stability.

Fiscal Policy & Government Budget

The government’s fiscal stance remains moderately expansionary, with a budget deficit of 3.80% of GDP projected for 2025. Increased spending on social programs and infrastructure aims to support growth but risks adding inflationary pressures if not matched by productivity gains.

External Shocks & Geopolitical Risks

Kyrgyzstan faces external headwinds from rising global commodity prices and regional geopolitical tensions, particularly related to trade disruptions with key partners in Central Asia. The som’s depreciation reflects these risks, which could exacerbate imported inflation.

Drivers this month

• Food inflation: +12% YoY, up from 10.50% in October
• Energy inflation: +15% YoY, up from 13.20% in October
• Core inflation: 6.70% YoY, up from 6.50% in October

Policy pulse

The inflation print strengthens the case for a potential policy rate hike in the coming months. The National Bank’s current 12% rate may prove insufficient to anchor inflation expectations if the trend continues.

Market lens

Immediate reaction: Local bond yields rose sharply, with the 2-year government bond yield increasing by 20 basis points. The Kyrgyz som weakened against the US dollar, reflecting market concerns about inflation’s impact on purchasing power and monetary policy tightening.

Looking ahead, Kyrgyzstan’s inflation trajectory depends on several factors, including monetary policy responses, external commodity price trends, and domestic supply conditions. We outline three scenarios with associated probabilities:

Bullish Scenario (20% probability)

• Global commodity prices stabilize or decline, easing imported inflation.
• Monetary tightening by the National Bank successfully anchors inflation expectations.
• Inflation moderates to 6-7% by mid-2026, supporting real income growth and investment.

Base Scenario (55% probability)

• Inflation remains elevated around 8-9% through early 2026 due to persistent food and energy costs.
• Gradual monetary tightening with incremental rate hikes to 13-14%.
• Moderate economic growth of 3-3.50%, with stable unemployment and manageable fiscal deficits.

Bearish Scenario (25% probability)

• External shocks worsen, including higher commodity prices and regional trade disruptions.
• Inflation accelerates above 10%, eroding real incomes and consumer confidence.
• Monetary policy lags, leading to currency depreciation and financial market volatility.

Structural & Long-Run Trends

Kyrgyzstan’s inflation dynamics are shaped by structural factors such as limited domestic production capacity, reliance on food imports, and currency volatility. Long-term reforms to improve agricultural productivity and diversify energy sources are critical to reducing inflation vulnerability.

Kyrgyzstan’s November 2025 inflation rate of 9.30% YoY signals a resurgence of price pressures after a mid-year lull. The data underscores the challenges facing policymakers balancing growth and price stability amid external shocks and structural constraints. While monetary tightening is likely, the effectiveness of such measures will depend on global commodity trends and domestic reforms. Investors and consumers should prepare for a period of elevated inflation, with risks skewed toward further increases if external conditions deteriorate.

Inflation Rate vs. KGSKGS Exchange Rate Since 2020

Since 2020, Kyrgyzstan’s inflation rate and the KGSKGS exchange rate have shown a strong positive correlation. Periods of rising inflation typically coincide with som depreciation against major currencies. For example, the inflation spike in late 2023 corresponded with a 7% drop in KGSKGS. This relationship underscores inflation’s impact on currency stability and purchasing power.

FAQs

What is the current Inflation Rate YoY for Kyrgyzstan?

The latest inflation rate for Kyrgyzstan is 9.30% year-on-year as of November 2025.

How does the Inflation Rate YoY affect Kyrgyzstan’s monetary policy?

Higher inflation above the central bank’s target range pressures the National Bank to consider raising interest rates to stabilize prices.

What are the main drivers of inflation in Kyrgyzstan?

Food and energy price increases, along with core inflation pressures, are the primary drivers of Kyrgyzstan’s current inflation dynamics.

Takeaway: Kyrgyzstan’s inflation surge to 9.30% YoY in November 2025 demands vigilant monetary policy and structural reforms to restore price stability and support sustainable growth.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.