CBA: Inflation in Azerbaijan defined by external factors for second year in row

Inflation in Azerbaijan is related to imports, it is mainly food-based, and for the second year in a row, according to the estimates of the Food and Agriculture Organization (FAO), it exceeds 30%, said Governor of the Central Bank of Azerbaijan (CBA) Elman Rustamov, answering a question about a possible revision of inflation forecasts for this and next years, Report informs.

“As you know, on the one hand, the reason for this situation is the [COVID 19] pandemic and the disruption of the global supply chain. Naturally, hence the rise in the cost of raw materials and logistics costs. At the same time, the supply of food in the world has decreased. This is how inflation is formed,” Rustamov said.

On the other hand, economic recovery leads to an increase in demand, he noted, adding that as a result, all these processes merge into one channel, external factors lead to an increase in inflation in Azerbaijan as well.

According to Rustamov, the Central Bank has estimated inflation in neighboring countries and Azerbaijan’s main trading partners. “I can say that this situation [rising inflation] takes place everywhere. Therefore, it is difficult to predict how long this situation will continue, since it depends on external causes,” he said.

“Of course, the liberalization of tariffs and prices will affect inflationary processes, but this is not a decisive factor. We will certainly monitor the situation,” he noted.

Rustamov added that inflationary expectations by the end of the year in Azerbaijan are more than 4%.

“We’ll see what happens before the end of the year. We are completing our analysis and will present it at a committee meeting,” he said.