ADB raises inflation forecast in Azerbaijan for 2025

The Asian Development Bank (ADB) forecasts average annual inflation in Azerbaijan at 4.2% in 2025, which is 0.4 percentage points higher than the previous estimate, Report informs referring to the bank's data.

ADB expects inflation in the country to decrease to 3.5% in 2026. 

"Inflation is expected to accelerate in 2025, reflecting the lagged impact of increased fuel prices, before slowing in 2026. The June 2024 rise in administered fuel prices has continued to affect other domestic prices. In addition, tariffs on water, electricity, and certain other utilities were raised in January 2025, adding to inflationary pressures. To keep inflation within its target range of 4±2%, the central bank has kept its policy rate unchanged at 7.25% since May 2024. In 2025, inflation may rise as well because of higher import prices, driven by spillover effects from possible global tariff changes. In 2026, slower growth and the waning impact of earlier administrative price increases should trim the inflation rate," the bank added.

For comparison, according to ADB forecasts, inflation in the Caucasus and Central Asia will be 6.9% in 2025 and 5.9% in 2026.

According to the Ministry of Economy of Azerbaijan, average annual inflation in the country will be 4.6% in 2025 and will decrease to 4% in 2026. In January of this year, the Central Bank of Azerbaijan forecast inflation at 5.5% in 2025 and 3.8% in 2026. The United Nations (UN) expects inflation in Azerbaijan to be 3.6% in 2025 and 3.1% in 2026.

The World Bank estimates average annual inflation in the country at 2.3% in both years. International rating agencies also give restrained forecasts: S&P Global expects 4% in 2025 and 3% in 2026, while Moody's published a similar forecast.

Average annual inflation in Azerbaijan in 2024 was 2.2%, and in January-February 2025 it rose to 5.4%.