Inflation in Azerbaijan is expected to decelerate to a level close to June in July-August, Gulnara Khaidarshina, Deputy Head of Research at Russia's Gazprombank and Chief CIS Economist, said, according to Report.
Inflation continued to decelerate in June, although it still exceeds the refinancing rate and the upper bound of the target corridor.
"Inflation in Azerbaijan again decelerated in June to 10.6% YoY, down by 0.9 pps from May's level. A slower pace of price growth continued to be seen across all segments – food, non-food products and services. We note that inflation remains above the CBAR’s target corridor (4% +/-2 pps), exceeding its upper bound by 460 bps and the refinancing rate by 160 bps," she said.
Food inflation in Azerbaijan slowed to 11.5% YoY in June, down by 1.2 pps compared with May. Deceleration of price growth was seen in meat, buckwheat, flour, fish, eggs, oil and fats products and fruits and vegetables. At the same time, growth in prices for sugar and nonalcoholic beverages continued to accelerate.
Inflation in the non-food segment continued to decelerate in June and amounted to 10.3% YoY (-0.4 pps MoM), driven by slower growth in prices for lumber, paper and laptop computers.
"That said, growth in prices for bicycles and detergents continued to accelerate, likely due to heightened demand for certain types of goods in the summer," Khaidarshina said.
According to her, growth in service tariffs decelerated by 0.7 pps to 9.8% YoY, due in part to slower growth in prices for foreign travel.
"That said, higher tariffs for urban transportation and taxi services had a restraining effect on the general trend toward deceleration," the expert noted.
Khaidarshina believes that external inflationary backdrop continues to ease.
"The leading exporters to Azerbaijan – Russia, Türkiye and China – collectively accounted for 48% of the country’s imports in 5M23. Despite minor acceleration, inflation in Russia remained low at 3.3% YoY. Growth of consumer prices in Türkiye continued to slow in June to 38.2% YoY, down by 1.4 pps vs. May. In addition, inflation in China decelerated to zero amid a slower than expected recovery of internal demand. We also note deceleration of inflation in the US and the Eurozone amid mounting risks of a slowdown in the global economy. Thus, risks related to higher import prices for Azerbaijan will ease in the near term," she said.