The Asian Development Bank (ADB) has revised downward its forecast for average annual inflation in Azerbaijan for 2024 to 2.1% and for 2025 to 3.8%, Report informs referring to the September issue of the ADB Asian Development Outlook (ADO).
In the April ADO report, inflation expectations were significantly higher, at 5.5% and 6.5%, respectively. According to the ADB, the decline in inflation is due to the ongoing effect of tight monetary policy, a slowdown in global commodity prices, and a decline in inflation in Azerbaijan's key trading partners.
In the first half of 2024, inflation fell to 0.7%, compared to 12.7% in the same period of 2023. At the same time, food prices fell by 0.6%, while prices for other goods and services rose by 1.2% and 2.4%, respectively.
In response to the decline in inflation, the Central Bank of Azerbaijan gradually reduced the key interest rate from 7.75% to 7.25% from January to July 2024.
However, an increase in administrative fuel prices in the second half of the year is expected to cause some increase in inflation, although the annual figure will remain lower than previously forecast. At the end of 2023, the average annual inflation in Azerbaijan was 8.8%. The government predicts that inflation will reach 2.7% in 2024 and 4.6% in 2025.