Annual inflation in Azerbaijan is projected to reach 5.9% in 2026 and 4.5% in 2027 under the baseline scenario, according to the latest forecasts from the Central Bank of Azerbaijan (CBA).
Operative Information Center-OMM reports, citing the CBA, that these figures represent an upward revision from previous estimates. The regulator had earlier projected annual inflation at 5.5% for 2026 and 4% for 2027.
The CBA stated that the upward adjustment in inflation forecasts is primarily driven by external cost factors. These include an acceleration in global food price increases, heightened inflationary pressures among major trading partners, and a slowdown in the appreciation of the nominal effective exchange rate. While a weakening of demand factors compared to February forecasts partially offset these pressures, the May outlook suggests that supply-side factors will account for a significant portion of inflation.
"Increasing geopolitical tensions have elevated the role of external factors in the balance of inflation risks. The conflict in the Middle East has created obstacles in supply chains, leading to higher transport and insurance costs, while simultaneously increasing price volatility in global energy markets. The continuation of these processes throughout the remainder of the year will be a key factor determining inflation dynamics among trading partners. International financial and credit institutions have also revised global inflation forecasts upward for the current year. In the coming periods, the scale of import inflation will depend on both inflation in partner countries and the dynamics of the nominal effective exchange rate. A primary internal risk factor is the possibility of inflation expectations driving consumption higher than anticipated," the CBA noted in its statement.
The Central Bank of Azerbaijan serves as the country's primary monetary authority, responsible for maintaining price stability and regulating the banking sector. By adjusting its forecasts, the CBA signals its readiness to monitor macroeconomic stability in the face of global economic shifts. Such updates are part of the bank's regular monetary policy reviews, which aim to align Azerbaijan's economic growth with international financial trends and domestic fiscal targets.
