Fitch Ratings predicts decrease in inflation rate in Azerbaijan
01 April 2023
According to international rating agency Fitch Ratings, Azerbaijan's inflation rate is expected to decrease from 13.9% in 2022 to an average of 10.3% in 2023, with a further decline to 7.3% in 2024.
Fitch attributes the anticipated decrease in inflation to moderating global commodity prices, easing supply chain disruption, and a stronger real effective exchange rate. However, the agency notes that the inflation rate is still above the Central Bank of Azerbaijan's target of 4% +/- 2pp.
In February, inflation moderated to 14.1% from a peak of 15.6% in October 2022, partly due to a 4pp easing of food price inflation to 17.1%. Fitch highlights that there is a greater domestic component than in the previous year, with nominal wages growing close to the headline rate.
While the main policy interest rate has only risen by 100bp over the last year to 8.5%, Fitch suggests that there is relatively weak monetary policy transmission. Nevertheless, other measures have been taken to absorb banking sector liquidity, including through reserve requirements.
Fitch attributes the anticipated decrease in inflation to moderating global commodity prices, easing supply chain disruption, and a stronger real effective exchange rate. However, the agency notes that the inflation rate is still above the Central Bank of Azerbaijan's target of 4% +/- 2pp.
In February, inflation moderated to 14.1% from a peak of 15.6% in October 2022, partly due to a 4pp easing of food price inflation to 17.1%. Fitch highlights that there is a greater domestic component than in the previous year, with nominal wages growing close to the headline rate.
While the main policy interest rate has only risen by 100bp over the last year to 8.5%, Fitch suggests that there is relatively weak monetary policy transmission. Nevertheless, other measures have been taken to absorb banking sector liquidity, including through reserve requirements.
Paylaş:
