The Central Bank of Uzbekistan reported a decline in annual inflation to 5.5% as of the end of May, with core inflation falling to 5.7%.

The regulator attributes this trend to the cessation of primary effects from electricity and gas tariff hikes in May 2025. However, alongside a slowdown in service price growth, food sector inflation has accelerated.

Inflation expectations from a May survey dropped to multi-month lows: among citizens, the figure fell to 10.1%, and among businesses to 10%. Financial experts have begun issuing more positive long-term forecasts.

Economic activity remains high, driven by rapid growth in retail trade, services, tourism, and investments. The regulator expects aggregate demand to stay elevated, supported by increased budget spending in recent months.

Meanwhile, the external economic environment remains highly uncertain. Instability in the Middle East is driving up global energy prices and logistics costs, causing supply disruptions for certain goods. Tight monetary policies by central banks in several countries are keeping external financing costs high for an extended period.

Against this backdrop, the domestic regulator maintains a moderately tight stance. Its inflation forecast remains unchanged at 6.5% for the end of this year, with a target of 5% by 2027. A new indexation of energy tariffs is expected to have a short-term impact on inflation, both directly and through secondary factors such as higher transport and production costs.

The Central Bank noted the positive effect of high interest rates on the financial sector, ensuring stable credit growth and encouraging savings. Total deposits reached 180 trillion soums by the end of May, including 122 trillion soums from households and 58 trillion soums from businesses.

Source: podrobno.uz