Kazakh social media was hit by a wave of fake news early this month. Some of it was quite likely anti-semitic, with netizens fed headlines like: "Water tariffs in Almaty set to skyrocket after the city's water resource management was handed over to the Israelis".
In current geopolitics, the Kazakh government has a largely positive engagement with Israel. It has, for instance, joined the US-brokered Abraham Accords. However, the reality is that many Kazakhs impulsively dislike both their country’s ruling regime and Israel’s policies on Palestine – there were bound to be plenty of kneejerk reactions to such claimed news, with the engagement helping to spread the toxic posts.
Almaty’s state-run water supply and wastewater utility is Almaty Su. With Kazakhstan's commercial capital and largest city digesting the fake news, Almaty Su had to issue a clarifying statement, namely that Israeli firm Mekorot was in no way taking control of the city's water supply. The company simply assisted the authorities in designing a masterplan for efficient water usage in Almaty, the utility explained.
As always, the obvious problem with social media posts pushing blatant untruths is the potential for a strange and potentially damaging misdirection of the issue at hand – the primary worry in this particular online debate should not have been the implication that a foreign country was intending to profit off the misfortunes of Kazakhs, it should have been the recent surge in water tariffs.
Starting from October 1, the tariff for water usage rose more than twofold to KZT 178.06 (approximately $0.40) per cubic metre, while the wastewater tariff rose 2.5-fold to KZT 119.46. The tariff hikes are explained as necessary to help authorities cover rising maintenance, workforce and electricity costs along with funding renovations to Almaty’s water infrastructure.
End of tariff hikes moratorium
It is worth noting that the KZT 76.56 per cubic metre tariff for cold water paid by Almaty residents until October 1, was introduced as a temporary measure under a moratorium adopted in September 2025. Prior to that, the city’s residents paid a social tariff of KZT 102.49 per cubic metre. The moratorium was brought in to ease inflationary pressures and delay the potential impact of utility tariff increases on inflation.
This freezing of utility tariff hikes was not limited to Almaty (and the wider Almaty Region) – a countrywide freeze on utility tariff hikes was adopted across the country on October 16, 2025. The nationwide freeze ended on March 31 this year.
At the same time, the Almaty-specific extension on tariff-hikes was not limited to water utilities. There was a nationwide adoption of higher utility tariffs on electricity at the end of spring, but Almaty enjoyed a moratorium on electricity prices until September 12 when a new retail ceiling price finally went into effect, moving Almaty's consumer electricity rate from 36.33 tenge to 45.59 tenge per kWh. Local price protections related to Almaty's heating infrastructure, meanwhile, remained active until late September.
The size of Almaty in Kazakhstan's economy means state price mismanagement in the city always has the potential to provide the drop that makes the vase overflow (Credit: José Manuel Suárez, cc-by-2.0)
The Almaty moratoriums speak to the city’s economic significance, with its large population. The country’s official statistics state that the number of city inhabitants stands at around 2.38mn (or more than one-tenth of the country’s total population of 21mn). However, unofficial or broader functional urban area estimates—which include the surrounding Almaty Region and commuter towns like Talgar, Kaskelen and Yesik—push the greater metropolitan population to 3.8mn. Unregistered internal migration, which accounts for a huge share of the city’s workforce, likely pushes that figure even higher.
Indeed, as Kazakhstan’s largest city and main financial centre, Almaty generates 20.5% of national GDP. Its economy is heavily concentrated in services and trade, meaning changes in local prices can carry considerable weight in the national consumer price index.
Though the Bureau of National Statistics does not publish a specific percentage showing Almaty’s contribution to overall national inflation, it does not take much deliberation to realise that utility tariff hikes in Almaty can significantly impact the national inflation indicators.
Annual inflation fell to 9.3% in September from 9.8% in August, taking headline inflation below 10% for a second consecutive month. This was mainly thanks to a still high policy rate of 16.25%, which at the beginning of the year was as much as 18% as the central bankers set out to combat inflation.
The September figure is also notable because Almaty itself recorded annual inflation of 8.4%, according to the statistics bureau. As such, inflation in Almaty likely stands as one of the primary driving forces putting downward pressure on prices across the country. In this sense, a tariff hike in Almaty could be problematic for the central bank's efforts to battle inflation, given the general impact of tariff hikes on prices.
Various observers and experts in Kazakhstan, throughout this year, have in fact stood alert to possible pressures in inflation that could stem from tariff hikes.
Inflation impacts
LS reported in March that Murat Temirkhanov, adviser to the chairman of Halyk Finance, expected the lifting of the tariff freeze to create additional inflationary pressure. He said the freeze on electricity, gas, water and fuel prices helped to contain inflation at the start of the year, but warned that its removal would have the opposite effect.
“Without this freeze, inflation would have been much higher. Under the government’s decision, regulated tariffs and prices will begin rising again from April, putting additional pressure on inflation,” Temirkhanov said.
Temirkhanov also argued that higher utility prices were difficult to avoid because infrastructure required investment and existing networks were ageing. He said that this reality would keep electricity, gas and water tariffs on an upward trajectory.
“Electricity, gas and water tariffs, as well as fuel prices, will continue to rise relatively rapidly, because without investment in these sectors, the deterioration of basic infrastructure will accelerate sharply and shortages of these goods and services will emerge,” he said.
An Informburo report, published on October 2, 2025, pointed out that across Kazakhstan, cold-water prices had risen by 84.3% since the beginning of the year, while wastewater tariffs increased by 36.4%. The publication said paid services had become a major source of inflationary pressure as utility prices increased.
An earlier assessment by the Association of Financiers of Kazakhstan (AFK), reported by LS in July 2025, placed a potential figure on the effect. Analysts estimated that higher utility tariffs could add 1.32 percentage points to overall inflation, although the contribution could fall to 0.82 percentage points if tariff increases were restrained.
The analysts warned that delaying tariff increases could also create a later price shock if accumulated costs eventually had to be passed on to consumers.
“In the future, this could necessitate compensation through sharp tariff increases, which, in turn, would trigger an accelerated surge in inflation. Such deferred inflation risks not only worsening macroeconomic indicators but also creating social risks, including reduced public confidence in the government’s economic policy and the National Bank’s monetary policy, as well as putting pressure on public spending,” representatives of the AFK were said to have warned.
The issue is particularly relevant for the service-sector-driven economy of Almaty because the city’s tariff increases are taking place against a broader backdrop of rising prices for paid services. Data published by the Bureau of National Statistics showed that paid services remained one of the faster-growing components of consumer prices at the end of the first half of 2026, rising 1.1% m/m in May and June.
Could new tariffs undo progress on inflation?
As outlined previously, the National Bank has been reversing some of the monetary tightening introduced during the period of double-digit inflation. The regulator cut its base rate by 50 basis points to 16.25% on September 4, following reductions to 17% in June and 16.75% in July. The decisions were driven by a slowdown in inflation, which, as mentioned, fell below the 10% double-digit inflation threshold for two months straight to the end of September.
The central bankers fought long and hard to get inflation back into the single-digit numbers.
Kazakhstan’s latest inflation data give the National Bank some room to continue easing monetary policy, but the central bank has already warned that the scope for further rate cuts is limited. Despite this, a survey published by Forbes Kazakhstan on October 8 found that 85% of financial-market experts expected another cut at the upcoming October 23 meeting, with 71% of those expecting a 25-basis-point reduction to 16%.
To reiterate, given Almaty’s significance, the renewed increase in regulated utility prices could create obstacles for the authorities' efforts to combat inflation and further limit the regulator’s ability to cut the base rate in the coming months.
The National Bank has as it happens directly warned that tariff increases need to be managed carefully because of their potential effect on inflation. A report by Informburo in April noted that National Bank governor Timur Suleimenov said the government understood the inflationary risks associated with lifting tariff hike moratoriums and needed to avoid increases that outpaced inflation.
“They fully understand the existing inflationary pressures and how important it is to ensure that tariffs increase at a reasonable and appropriate pace, without outstripping inflation,” Suleimenov said.
Suleimenov acknowledged that tariff increases could be necessary but said they should be selective and limited in scale.
“If necessary, tariffs should be increased, but the increases should be selective and moderate. They have risen by 30%, 20% and 25% [in the recent past]. We must not allow increases anywhere near that level again, otherwise we will not be able to bring inflation down from double digits,” Suleimenov said.
Later in September, the regulator specifically identified regulated prices as among the domestic risks to its inflation forecast. It raised its 2027 inflation forecast to 6.5%-8.5% from 5.5%-7.5%, citing higher external inflation, revised assumptions for regulated prices and a stronger fiscal impulse. Its 2026 forecast remains at 9%-11%, while its medium-term objective is to bring inflation towards 5% in 2028.
Another report by Informburo said that, when asked whether Kazakhstan could reach its 5% inflation target before 2028, Suleimenov pointed to higher tariffs and fuel prices as among reforms that could not simply be postponed.
“We would, of course, like to achieve it sooner, but we recognise that certain things are unavoidable—increases in tariffs and fuel prices, as well as a number of other reforms and changes that the government is largely compelled to implement because they were postponed in the past,” Suleimenov said.
Suleimenov added that the central bank was therefore working from an econometric forecast that moved the return to the 5% inflation target to 2028, rather than assume that the target could be reached earlier.
To conclude, if the tariff hike in Almaty does push up inflation, the widely expected October rate cut might not come to fruition. And if the impact is of particular significance, the rate may be held where it is for a prolonged period, or a rate hike might suddenly be in view.