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Impact of Monetary Factors on Rise of Inflation

Business Materials 18 December 2006 14:26 (UTC +04:00)

According to the econometric model of the National Bank of Azerbaijan (NBA), over January-November, 2006, the share of monetary funds in the formation of 9%-inflation made up 64.1%.

NBA informed Trend that growth of monetary factors in this period was linked with the conversion of the currency by the Bank, with 92% implemented with respect to finance the budget expenses. Increase of money mass was 62.3%.

The considerable growth occurred in the period from January to September (81.5%). The nominal efficient rate on the non-oil sector of economy made up 1.8 percent, while rise over the first 9 months of 2006 was 2.4%.

In difference to previous months, non-monetary factors had insignificant influence on the inflation rate (35.9%). The share of administrative regulated prices in the reporting period made up 26.3%, which is connected with the diesel fuel price increase in January by 2 times, kerosene 1.3 times, sugar 34.8%. The influence of seasonal factors was at the level of (-5.2%), where due to summer, the prices in May-August, 2006 decreased by 4%. Whereas, due to winter, the prices increased by 3,6% in January-April and September-November, which decreased inflation rate on 5.2%.

The share of foods in the formation of the inflation in November, 2006 versus the beginning of the year made up 77.4%. The share of bread and bakery foods - 5.2%, meat and meet foods 19.1%, fruits and vegetables 32.6%, oil and fat 1.3%, milk and eggs 10.6%, sugar, tea 8.5%, alcohol and tobacco 0.2%. In the reporting period, the share of nonfoods in the formation of the inflation rate was 17.9%, services 4.6%.

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