The paper analyzes the patterns of dynamic effects of fiscal policy to domestic inflation in the context of a small open economy. Using 4-variable (government spending, fiscal deficit, money stock (M2), and domestic inflation rate) vector autoregression model estimated with quarterly data for Kazakhstan’s economy in the period of 2005Q1-2020Q1. We distinguish between government expenditure on consumption and investment. As a result, we find that a fiscal policy shock have certain positive effects on the inflation rate. In particular, social protection spending adds 1% to the inflation rate in the following four quarters, while the government capital purchases do not produce sizable effect on inflation dynamics even in the longer term horizons. Overall, for the fiscal policy to become inflation-neutral, we suggest several policy recommendations.