Inflation uncertainty and behavioral consumption dynamics in Kazakhstan

Abstract

Objective – to examine the impact of inflation uncertainty and cognitive biases on household consumption in Kazakhstan over the period 2011–2024. Methods – econometric modelling based on data from the Household Budget Survey and macroeconomic indicators of the National Bank of Kazakhstan; estimation of inflation uncertainty using a GARCH(1,1) process; measurement of anchoring bias as the deviation between expected and actual inflation; application of a pooled OLS model with year fixed effects and Newey–West robust standard errors to account for behavioural and macroeconomic factors. Results – inflation uncertainty significantly reduces household consumption (β = -0.32), confirming the presence of a precautionary saving motive; expected inflation increases consumption (β = 0.05) as households anticipate higher future prices; anchoring bias exerts a small negative effect (β = -0.03), indicating limited responsiveness to new information; household income has a strong positive effect on expenditure (β = 0.74); the model explains 96% of the variation in household consumption. Conclusions – behavioural factors play a substantial role in shaping consumption decisions under conditions of inflation uncertainty; strengthening the transparency and credibility of monetary policy communication by the National Bank of Kazakhstan can mitigate anchoring behaviour and stabilise household consumption expectations.