Inflation forecasts in Azerbaijan may be revised upward for the current year in light of global economic risks and recent market trends.
The Operative Information Center-OMM reports, citing the Central Bank of Azerbaijan (CBA), that while the base scenario for year-end inflation remains within the target range for 2026 and 2027, an analysis of recent developments suggests a high probability of an upward revision for the 2026 forecast.
"Since the last meeting on interest rate corridor parameters, we have observed the activation of factors that could exert upward pressure on the inflation risk balance. The transition of regional tensions into a more acute phase is increasing price and index volatility in global commodity and financial markets," the CBA stated in an official release.
According to the regulator, the primary external risk involves the pass-through of import prices to domestic inflation. Disruptions in global oil and gas supply chains, rising energy prices, and increased logistics costs are expected to drive inflation higher among Azerbaijan's key trading partners. The extent of this impact on the domestic market will depend on both international processes and the dynamics of the nominal effective exchange rate. Domestically, supply-side constraints and cost factors remain the most significant drivers of price growth.
Despite these emerging risks, the CBA noted that annual inflation currently remains within the target band. In February 2026, the 12-month inflation rate stood at 5.7%. Specifically, annual price increases were recorded at 6.8% for food products, beverages, and tobacco, 5.7% for paid services, and 3.7% for non-food products. Annual core inflation was recorded at 5.6%.
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 the refinancing rate and monitoring the inflation target band (typically set at 4% ± 2%), the CBA aims to ensure macroeconomic stability in Azerbaijan. This latest assessment reflects the bank's proactive approach to mitigating external shocks caused by global geopolitical instability and fluctuating energy markets.
