Dynamics of the Personal Consumption Expenditure Price Index

According to our Personal Consumer Expenditure Price Index, we see continued increased demand for goods and services throughout the year relative to the values of the previous period.

At the same time, we can notice an unusual increase in demand in March of this year, which, in our view, is associated with an increase in uncertainty, exchange rate weakening and a geopolitical shock. Subsequently, there was a sensible contraction of consumer demand to a minimum in May. And then consumer demand returned to the growth trajectory, reaching highs in July and August.

Similar dynamics are seen in the demand for consumer goods. The peak values occurred in March, then there was a decline and a subsequent quite steady increase in the summer period.

Demand for non-food products shows very high values throughout the year, the peak value was noted in March and July, followed by normalization by the end of August.

The July increase in demand for non-food products occurred concurrently with the weakening of the tenge. This may indicate a certain pattern of people’s behaviour in the terms of price hikes for non-food products: understanding of further price increases due to the tenge weakening and a great effect of transfer to the cost of non-food products, which affects the desire of population to make a purchase now, while prices have not yet risen.

For non-food products, a significant increase in demand relative to last year excluding inflation is observed in the clothing and footwear category by an average of 40%-45% more. At the same time, the demand for domestic home appliances and electronics began to be steady in the growth zone only since June, whereas earlier expenditures were either less than last year’s figure or within the norm – 15%. Moreover, we note a rather significant decrease in demand for furniture and construction goods, which indicates a certain cooling of the housing and construction market relative to last year.

And by services, there is an increase in expenditures on cafes and restaurants. The maximum expenditures fell during the summer period, which is partly due to certain restrictions observed last year related to quarantine. Similar dynamics are demonstrated by the costs of services in recreation and tourism and for the purchase of air tickets.

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