Central Bank of Azerbaijan: Annual inflation moving along projected trajectory

Annual inflation in Azerbaijan is moving along the projected trajectory and is within the target range, Report informs referring to the Central Bank of Azerbaijan (CBA).

"In October 2025, 12-month inflation was 5.9%. Annual price growth for food products, alcohol, and tobacco products reached 8.2%, for paid services 5.6%, and for non-food products 2.5%. Core inflation in annual terms was 5%.

"Actual inflation is primarily influenced by external and domestic cost factors," the CBA notes.

According to the baseline scenario, the forecast for annual inflation to remain within the target by the end of 2025 and in 2026 remains unchanged.

"However, an analysis of current trends indicates a likely downward revision of the inflation forecast for next year," the statement reads.

Furthermore, the CBA noted that an analysis of changes in the balance of inflation risks since the previous key rate meeting indicates a relative decline in pro-inflationary factors.

"Nevertheless, geopolitical tensions and instability in the global trade environment continue to maintain a high level of uncertainty in commodity and financial markets. The key external risk is related to the transmission effect of import prices to domestic inflation. Its scale will depend on inflation processes in trading partner countries and the dynamics of the nominal effective exchange rate.

Domestic risks are primarily driven by supply-side and cost factors. At the same time, the initial parameters of the state budget for 2026, as well as the slowdown in annual lending growth rates, reduce the likelihood of excessive growth in aggregate demand," the regulator notes.