Moody's: Inflation in Azerbaijan remains moderate despite rising energy costs

Inflation in Azerbaijan continues to remain relatively moderate despite rising energy costs, Report informs referring to the international rating agency Moody's.

According to the forecasts, the median inflation rate in Eastern Europe, Central Asia, and the South Caucasus will be around 5% in 2026-2027, which is practically in line with the 2025 level. Increased energy and transportation costs driven by the Middle East conflict are heightening inflationary pressures, while domestic factors - utility and energy tariff reforms, subsidy rationalization, and robust wage growth - continue to slow the disinflation process, analysts noted.

According to Moody's estimates, the highest inflation levels are recorded in Central Asian countries, primarily Kazakhstan, the Kyrgyz Republic, and Uzbekistan, whereas in Armenia, Georgia, and most Western Balkan states, inflationary processes are under tighter control.

Ukraine is an exception to the overall picture due to supply chain disruptions and energy infrastructure destruction caused by military actions, while inflation in Azerbaijan is held at a relatively moderate level despite rising energy prices, the report reads.