Fitch: Annual inflation in Azerbaijan will decrease in coming years

Fitch Ratings forecasts average inflation of 13.7% in 2022, falling to 9.7% in 2023, helped by the real effective exchange rate appreciation and easing supply-chain disruptions, and to 6.8% in 2024, but still above the CBA target (4%, +/-2pp) and the projected 'BB' median of 4%, Report informs, citing agency.

Inflation rose 15.6% yoy in September, fuelled by a 21.8% rise in food prices, exacerbated by disrupted imports from Russia and Ukraine.

Monetary policy transmission is weak and the policy interest rate has been raised only 50bp this year to 7.75%, although there has been tightening of liquidity through reserve requirements and a broadening of CBA's liquidity tools.