Tashkent, Uzbekistan (UzDaily.com) -- Experts from the Institute for Forecasting and Macroeconomic Research (IPMI) studied inflation factors and their dynamics.

Ensuring inflation at a low level is an important factor in macroeconomic stability, which creates the necessary conditions for social development, increased investment activity, and continued structural reforms that contribute to the economic development of the country.

Consistently low inflation contributes to increased stability in the economy, which creates favorable conditions for international investors.

At the end of 2021, the CPI inflation rate was 9.8%. At the same time, 5.2% of inflation falls on inflation of food products, 3% and 1.6% - on non-food products and services, respectively. 

Estimated results showed that inflation in trading partner countries is the main factor influencing inflation in Uzbekistan, since an increase in imported inflation can explain about 38% of headline inflation. The contribution of demand factors such as money supply, interest rate and GDP to inflation in Uzbekistan is 29%. Finally, changes in cost drivers are driving CPI growth by 33% in Uzbekistan.

Imported inflation accounts for 3.63% of 10.9% in 2022. Russia, China, Kazakhstan, South Korea and Turkey together account for 2.36% of inflation in Uzbekistan. Russia and China made the largest contribution to imported inflation due to the significant share of these countries in total imports of Uzbekistan (21% and 19% respectively) - 0.78% and 0.7%, while the impact of imported inflation from Kazakhstan, South Korea and Turkey was approximately 0.39%, 0.26% and 0.24% of total imported inflation.

The influence of inflation from Russia is mainly observed in manufactured goods, machinery and transport equipment. Similarly, imported inflation from China mainly affected machinery and transport equipment, manufactured goods, and chemical products. Inflation from Kazakhstan over the past year was mainly observed in food and industrial goods. Imported inflation from South Korea and Turkey mainly affected the prices of machinery and transport equipment.

In this study, three empirical models were used: the Mark-Up model, the monetary model, and the dollar inflation model, i.e. in the rise in prices for imported products in dollars.

Based on monthly data from January 2016 to May 2022, it was decided to use the Consumer Price Index (CPI) as the dependent variable. The data for calculations were obtained from open statistics of the Central Bank of the Republic of Uzbekistan and the State Committee on Statistics.