Tashkent, Uzbekistan (UzDaily.com) -- The Central Bank of Uzbekistan increased the forecast for general inflation under the main scenario for 2024 from 8−9% to 9−11%. This is stated in the Central Bank’s commentary on monetary policy for the first quarter.

According to the regulator, increasing tariffs for electricity and gas in Uzbekistan will add 2.4 percentage points to the overall inflation rate.

It is predicted that rising prices for electricity will increase inflation by an additional 1.2 percentage points, for natural gas - by 1 percentage point, and for liquefied gas - by 0.2 percentage points.

The Central Bank noted that electricity tariffs for legal entities were increased last year, so the secondary effect of this change will be low, given that the new tariffs are only being introduced for households. It is also noted that this secondary effect is mainly associated with changes in inflation expectations.

Inflationary expectations of households and businesses reflect, to some extent, rising energy prices. In addition, proposed social norms and payment deferral options may help mitigate the negative impact of changes on inflation expectations.

The regulator noted that it will take some time to assess how inflation expectations will change due to tariff increases.

According to the Central Bank, ensuring uninterrupted supply of energy resources is critical to containing the impact of rising prices.

The regulator also noted the impact on overall inflation of the abolition of the zero VAT rate for some medical and veterinary services, medicines and veterinary products, as well as medical and veterinary products, as well as utilities (cold water and sewerage, heating and hot water).

These tax changes are expected to further increase inflation by 1 percentage point, but a return to a downward trend is expected from the fourth quarter.

Moreover, due to accelerating inflation, real incomes of the population may decrease slightly, the regulator’s report says.

Taking this into account, the Central Bank increased the forecast for overall inflation under the main scenario for 2024 from 8-9% to 9-11%.