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Food price index slightly increases in Azerbaijan

Finance Materials 28 May 2020 17:29 (UTC +04:00)
Food price index slightly increases in Azerbaijan

BAKU, Azerbaijan, May 28

By Eldar Janashvili – Trend:

According to the results of the first quarter 2020, the price index for foodstuffs, which have a big share in the consumer basket, grew by six percent in Azerbaijan year-on-year, Trend reports referring to the Central Bank of Azerbaijan (CBA).

This has been mainly conditioned by an increase in population’s demand following stockpiling food during the quarantine regime, as well as the limitation of supply sources and a certain increase in expenses.

The annual growth rate of prices for non-food products and services, which is another component of inflation (1.2 percent on both components), remains below the indicator of the target range.

The low inflation rate on non-food products has been caused by a decrease in demand during the pandemic, as well as the depreciation of the rates of the national currencies in some partner countries.

In general, the inflation rate in Azerbaijan remained below the average of the announced annual target range in the first quarter of 2020. One of the factors supporting the growth of real income of the population was the preservation of inflation at a low recessive level.

According to the calculations made on the basis of the CBA’s data, annual inflation rate amounted to 3.3 percent in March 2020, which is within the target corridor declared by the CBA (4 ± 2 percent).

The stability of administrative prices is also one of the main factors contributing the low inflation rates. In total, the cost of 79 out of 520 kinds of goods and services decreased while 42 remained unchanged. The prices of 44 percent of the products which increased in price grew by less than two percent.

In general, the monetary conditions, the dynamics of administrative prices and a decrease in food prices on the world market had a stabilizing effect on the inflationary expectations.

The average annual core inflation, calculated without taking into account the regulated prices, as well as the changes in the prices for seasonal agricultural products, amounted to 2.2 percent in the first quarter of 2020.

The inflation expectations were growing during the last month of the quarter amid the negative consequences of the pandemic.

As the monitoring of the real sector shows, the inflation expectations increased in the services sector, non-oil industry and trade, but remained unchanged in the construction sector in March compared to February.

Households’ inflation expectations were higher in the first quarter and this trend is temporary. The forecasts say that inflation rate will remain in the target range (4 ± 2 percent) in 2020.

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Follow the author on Twitter: @eldarjanashvili

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