Annual inflation is expected to be 5.7% in 2025 and 5.3% in 2026, according to the July forecast of the Central Bank of Azerbaijan (CBA), SİA informs.
In April, the CBA forecasted annual inflation around 5.3% in 2025 and 4.3% in 2026.
"The alignment of inflation forecasts with the target and continued FX market stability provides grounds for easing monetary policy. Further decisions regarding the parameters of the interest rate corridor will depend on the dynamics of actual and forecast inflation, as well as internal and external risk factors. The Central Bank will continue to employ all available tools to maintain price stability," the CBA said.
According to the CBA, annual inflation is moving along the projected trajectory. In June 2025, 12-month inflation stood at 6%. Annual price growth was 7% for food, alcoholic beverages, and tobacco products, 7.2% for services, as well as 2.8% for non-food products. Annual core inflation was 4.8%.
"Although uncertainties surrounding external factors have persisted in recent months, their rising impact on inflation has not been significant. According to the International Monetary Fund, the commodity price index declined by 0.6% annually in June 2025, including a 4.2% decrease in the food price index," reads the CBA's statement.
"There have been no significant changes in the balance of inflation risks since the last meeting. Developments in global trade continue to cause fluctuations in commodity and financial markets. In this context, imported inflation remains an external risk factor, which is influenced both by inflation trends in trading partner countries and by the dynamics of the nominal effective exchange rate. The main internal risk factor for inflation is the activation of cost pressures and excessive growth in aggregate demand. Therefore, the potential impact of government spending and consumer lending on aggregate demand and prices over the medium term should be closely monitored," it said.
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