THE IMPACT OF INFLATION ON HOUSEHOLD LIVING STANDARDS AND MECHANISMS FOR ITS CONTAINMENT: EVIDENCE FROM UZBEKISTAN

Abstract

Persistent inflation erodes purchasing power, redistributes wealth and raises uncertainty, and its burden falls unevenly across households. Uzbekistan has experienced a prolonged disinflation since 2025 but still operates above its 5% target. To assess how inflation affects household living standards and to evaluate the mechanisms used to contain it, using Uzbekistan as a case. A desk-based, mixed analytical design was applied: a structured literature review, a descriptive analysis of publicly reported Central Bank of Uzbekistan (CBU) inflation and policy-rate data for 2025–2026, and a criteria-based assessment of containment mechanisms. Annual inflation slowed from 9.9% in January 2025 to 7.2% in January 2026 and to 6.4% in September 2026, while core inflation stood at 5.5%. The key rate has been held at 14% since March 2025, which implies a clearly positive ex-post real policy rate. Residual pressure comes from strong domestic demand, fiscal stimulus, rapid retail lending, regulated-price and tariff adjustments, and external food and energy prices. The CBU expects inflation of about 7% at end-2026 and a decline to 5% by end-2027.Disinflation has supported real incomes, but gains are fragile because food and regulated-price items weigh heavily in poorer households' budgets. Durable containment requires coordination of tight monetary policy with fiscal discipline, supply-side measures, anchored expectations and targeted social protection.