ADB: Exchange rate stability in Azerbaijan to moderate impact of imported inflation

According to forecasts by the Asian Development Bank (ADB), average annual inflation in Azerbaijan in 2024 will be 5.5%, and in 2025 it will increase to 6.5% with faster economic growth, according to an April Asian Development Outlook (ADO), Report informs.

According to the previous (September 2023) ADB assessment, inflation for 2024 was projected at 8.5%.

“Inflation should remain in check as the authorities monitor prices over the forecast period. Continued exchange rate stability will moderate the impact of imported inflation. The central bank is expected to maintain its policy rate at least to mid-2024 and to observe price movements and consumer sentiment before making changes,” the ADB noted.

The continued peg between the Azerbaijan manat and the US dollar helped curb pressure from imported inflation. To May 2023, the Central Bank of Azerbaijan raised its policy rate in three steps from 8.25% to 9% before lowering it to 8% in two steps from October to December and then to 7.75% in February and to 7.5% in March 2024 as inflation decreased.

According to the State Statistics Committee, the consumer price index in Azerbaijan in January-March this year amounted to 101% compared to the same period last year, including 99.7% for food, drinks and tobacco products, 101.4% for non-food products, 102.5% for paid services provided to the population.

In Azerbaijan, inflation was recorded at 0.2% in March 2024 compared to inflation of 0.6% in February, and for the year amounted to 0.4%.

The Azerbaijani government forecasts average annual inflation at 5.3% for 2024.

In 2023, average annual inflation in Azerbaijan was 8.8%.