BAKU, Azerbaijan, January 31. The inflation forecast for 2024 has been kept unchanged, Trend reports, referring to the Central Bank of Azerbaijan (CBA).
The CBA data shows that the annual inflation for 2024 is projected to stay within the targeted range, consistent with the forecasts from January and mirroring the figures reported in October of the previous year.
"The decrease in global economic activity, coupled with the ongoing decline in worldwide commodity, energy, and food prices, has restricted the influx of inflation into the country. The World Bank reports an 18.9 percent year-on-year decline in the commodity price index in December, with a substantial 24 percent drop specifically in energy prices. Furthermore, the UN Food and Agriculture Organization (FAO) notes a 10.1 percent year-on-year reduction in the food price index for December," CBA noted.
The CBA highlighted that maintaining equilibrium in the foreign exchange market played a crucial role in restricting the influx of inflation.
"In 92 percent of the foreign exchange trades carried out at CBA in 2023, there was an excess of supply over demand. Over this period, the nominal effective exchange rate of the manat witnessed a notable appreciation of 19.3 percent, serving as the primary factor in mitigating the impact of imported inflation.," the CBA said.
The CBA underscores that the primary domestic risks that could potentially amplify inflation include the undue expansion of aggregate demand and the activation of domestic cost factors.
"If the current trends persist, interventions by CBA in the foreign exchange market for 2024, akin to the past two years, are likely to be more focused on buying. The CBA maintains a vigilant watch on the dynamics of budget expenditures and credit activity as crucial factors influencing domestic demand. Overall, the risks of inflationary increases and decreases are deemed to be in equilibrium. The inflation forecast for 2024 remains unchanged, aligning with the predictions from January of this year and mirroring the situation observed in October of the previous year. It is anticipated that the annual inflation in 2024 will stay within the targeted range," the CBA stated.
According to the CBA's monetary policy framework statement for 2024, the anticipated annual inflation for the country is projected to hover around 5–5.5 percent in the same year.
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