Asian Development Bank changes inflation forecast for Azerbaijan

The Asian Development Bank (ADB) has raised inflation expectations in Azerbaijan for this year to 4.5%, one percentage point higher than the previous forecast, Report informs, citing the Asian Development Outlook (ADO) 2021 of the Asian Development Bank (ADB).

According to the ADO 2021, next year, inflation will be 3% in Azerbaijan.

This figure will be 9.5% in Georgia, 6.9% in Kazakhstan, and 5.5% in Armenia in 2021. Next year, inflation in these countries will be 4%, 6.4%, and 3%, respectively.

The ADB has increased the inflation forecast for the Central Asian region for this year to 7.7%, an increase of 0.9 percentage points compared to the previous forecast. The region’s inflation forecast for the next year is also increased by 0.4 percentage points to 6.7%.

The Azerbaijani government forecasts average annual inflation at 5.4-5.8% and annual inflation at 7-7.5% this year. In 2022, annual inflation is projected at 4-5%.

According to official statistics, the inflation rate in August was 0.5%, while the 12-month increase in the general price level was 6.7%. The average annual inflation was 4.8% in January-August. Average annual core inflation, excluding government-regulated prices as well as seasonally sensitive agricultural products, was 3% in January-August 2021.

In August, the food price index rose 0.8%, and annual food inflation was 7.8%. The average annual food inflation was 5.4% in January-August. Historical analysis of seasonal factors shows that in the last decade, cumulative deflation of food products was observed in May-August of each year, while in the reporting period of the current year, there was only 0.8% deflation. Food inflation is seriously affected by the continuing rise in world food prices. According to the UN Food and Agriculture Organization, world food prices rose by 3.1% in August and 32.9% over the past year.

In August, prices for non-food products and services rose by 0.3% and 0.2%, respectively. On an annual basis, inflation was 5% for non-food products and 6.4% for services.