Gazprombank names factors of inflation stabilization in Azerbaijan

Consumer price growth in Azerbaijan continued to accelerate in June, but signs of stabilization have emerged, writes Gulnara Khaidarshina, deputy head of research at Russia’s Gazprombank and chief CIS economist, Report informs.

“Inflation reached 14.2% YoY in June, up by 0.5 pps vs. May, primarily due to stronger inflationary pressure in the food and services segments. Food inflation in Azerbaijan accelerated to 20.6% YoY, adding 0.4 pps vs. May,” she noted.

According to the Statistics Service of Azerbaijan, inflationary pressure continues in the segments of confectioneries, bakery and pasta, meat, oil & fats and dairy products. That said, growth in food prices subsided significantly in June compared with the 1.8 pps growth recorded in May, apparently due to, among other things, slower inflation in Russia (-1.2 pps vs. May to 15.9% YoY), one of the key suppliers of food products to Azerbaijan.

“We also note signs of stabilization of non-food inflation, supported by a stable AZN exchange rate, which is the anchor of macroeconomic stability in Azerbaijan and is being supported at a level of USD/AZN 1.7. In addition, non-monetary measures to combat inflation are having an impact, including the abolition of import duties on a number of socially imported goods. Inflation in the non-food segment accelerated moderately in June (+0.3 pps vs. May to 7.4% YoY).

The acceleration of inflation in the services sector to 10.9% YoY (+0.6 pps) is likely due to the onset of the tourist season – the first following the withdrawal of most quarantine restrictions. The most significant acceleration of tariff growth was seen in the housing rental, catering and transportation service segments,” she added.