Currency volatility drives inflation fears in Uzbekistan

Inflation expectations worsened in Uzbekistan in September, with increasing concerns over the impact of exchange rate fluctuations. According to a report by the Central Bank, inflation expectations among residents and businesses have risen, particularly in Tashkent and Tashkent region.

For the general population, inflation expectations for the year ahead averaged 13.3%, a 0.2 percentage point increase from August. The highest inflation expectation was recorded in Tashkent city, at 15.2%. Residents with incomes above 15 million UZS had the most pessimistic outlook, with inflation expectations reaching 15.8%. In Tashkent, 36% of respondents anticipated inflation to exceed 17%.

Key factors contributing to these inflation concerns included:

Exchange rate fluctuations (50% of respondents)
Rising fuel and energy prices (47%)
Increased costs for utilities (45%)
Higher wages and pensions (39%)

The share of respondents citing exchange rate changes as a primary driver of future price increases rose notably in September, reflecting growing anxieties over currency depreciation.

Business Sector Inflation Expectations

In the business community, inflation expectations for the next 12 months averaged 12.6%, a slight decrease of 0.1 percentage points from the previous month. Despite this marginal decline, concerns over price increases remain high, with exchange rate fluctuations being the top concern for 51% of business respondents. Other factors cited by businesses included:

Rising utility costs (46%)
Increased fuel and energy prices (44%)
Higher wages and pensions (38%)

Among different sectors, the highest inflation expectations were reported in the trade industry at 14%, while the lowest were seen in the agriculture sector at 11.3%. Healthcare had the most pessimistic outlook among business sectors, with an inflation expectation of 13.6%, while the café and restaurant sector was the most optimistic, at 11.3%.

Regional Breakdown

The highest inflation expectations among residents were recorded in Tashkent (15.2%) and Surkhandarya (14.4%), while the lowest were observed in Karakalpakstan (12.2%) and Kashkadarya (12.4%). Similarly, business expectations were highest in Tashkent (14.4%) and Jizzakh (14.3%) regions, and lowest in Karakalpakstan (10.7%).

As inflation expectations continue to rise, especially in Tashkent, both businesses and residents are increasingly focused on the potential impact of exchange rate volatility on prices.