The Central Bank classified climate change as one of the inflation shocks

The Central Bank classified climate and weather fluctuations as inflationary shocks, according to economist Otabek Bakirov.

According to the regulator, in recent years, there has been an increase in sharp changes in climatic and weather conditions, which creates risks for the stability of the country’s water supply and negatively affects agriculture and the economy. Unexpected drought can reduce yields and decrease the supply of food products in the domestic market.

In addition, abnormally cold or hot weather can lead to power outages and a sharp increase in transaction costs in the economy. This affects not only the standard of living of the population, but also the formation of inflation expectations.

The growing concern about food security is exacerbating an atmosphere of uncertainty in the consumer market, which can negatively affect the decision-making process in the sphere of consumption and investment.

Under the influence of this shock, the inflation rate may exceed the baseline scenario by 0.5-0.6%, and the GDP level may decrease by 0.35-0.45%. Due to price increases caused by worsening climate and weather conditions, monetary policy can remain at a stricter level for a longer period to prevent these factors from affecting inflation expectations.

Earlier, it was reported that the Central Bank had retained the key interest rate. In September, inflation decreased slightly.