Bank: Inflation in Azerbaijan to slow down in 2H25

Inflation in Azerbaijan will slow in the second half of 2025, Report informs, referring to a September update from the Asian Development Bank (ADB).

Inflation accelerated in the first half of 2025 amid rising prices for imported goods and tariff increases (for state-regulated services) in mid-2024 and early 2025. Average annual inflation rose from 0.7% in the first half of 2024 to 5.9% at the end of June 2025. Food prices rose by 6.6%, other goods by 2.7%, and services by 7.5%, the bank's update notes.

According to ADB estimates, inflation will slow over the remainder of the year as the effect of administrative price adjustments fades.

As inflation remained within the target range of 2%-6%, the Central Bank of Azerbaijan lowered the key interest rate from 7.25% to 7% in July 2025, the first time since May 2024. Given the expected slowdown in inflation in the second half of 2025, our inflation forecasts for 2025-2026 remain unchanged at 4.2% and 3.5%, respectively, the update notes.

According to the Ministry of Economy's forecasts, average annual inflation in the country will be 5.4% this year and 4.3% next year. According to the Central Bank of Azerbaijan's latest forecasts (July 2025), inflation will reach 5.7% this year and around 5.3% in 2026.