Central Bank of Azerbaijan updates its annual inflation forecasts

Under the baseline scenario, annual inflation in Azerbaijan is expected to stand at 5.9% both at the end of 2026 and in 2027, Report informs, citing the Central Bank of Azerbaijan (CBA).

"The baseline scenario assumes that state-regulated prices and tariffs remain unchanged," the CBA said.

Earlier, the bank had stated that annual inflation would be 6.1% in 2026 and 5.8% in 2027.

"Annual inflation is within the target range (4±2%) and is moving in line with the projected path under the baseline scenario. In September 2026, twelve-month inflation stood at 5.5%, 0.2 pp lower than in August. Annual inflation was 6.9% for food, alcoholic beverages and tobacco products, 5.1% for paid services, and 3.6% for non-food goods. Annual core inflation stood at 4.9%.

Inflation risks are primarily driven by the external environment. Against the backdrop of global geopolitical uncertainty, the risk of higher energy and food prices, and the risk of these increases to pass through to domestic prices from major trading partners, remains significant. The extent of this pass-through will depend, among other factors, on dynamics of the nominal effective exchange rate of the manat. In the upcoming period, the Central Bank's inflation forecasts will be revised primarily depending on the extent to which these risks materialize. Under the current fiscal and monetary policy conditions, domestic demand is not expected to significantly intensify inflationary pressures," the bank said.