CBA: Inflation Forecast for This Year May Be Raised

As a result of recent trends, the inflation forecast for this year in Azerbaijan may be increased.

Report informs about this, citing the Central Bank of Azerbaijan (CBA).

According to the information, based on the baseline scenario, the forecast that annual inflation will remain within the target range by the end of 2026 and 2027 remains unchanged. Analysis of recent trends indicates the possibility of revising the inflation forecast for 2026 upwards.

"Since the last meeting on the parameters of the interest rate corridor, the activation of factors that could have an increasing impact on the balance of inflation risks has been observed. The escalation of tensions in the region is increasing price and index volatility in global commodity and financial markets. In this situation, the main external risk is related to the pass-through of import prices to domestic inflation. Thus, disruptions in global oil and gas supply chains, an increase in energy product prices, and rising logistics costs could lead to increased inflation in trading partners. The risk of import prices passing through to domestic inflation will depend not only on inflation processes in trading partners but also on the dynamics of the nominal effective exchange rate. Among domestic risk factors, supply-cost factors remain important," the CBA stated.

Furthermore, the institution reminded that annual inflation is currently within the target range. In February 2026, 12-month inflation was 5.7%. The annual price increase was 6.8% for food products, alcoholic beverages, and tobacco products, 5.7% for paid services, and 3.7% for non-food products. Annual core inflation was 5.6%. The observed inflation is mainly formed under the influence of foreign-origin cost factors.