Azerbaijan's Central Bank Forecasts 5.9% Inflation for 2026 and 2027

Azerbaijan's Central Bank (CBA) expects annual inflation to remain within its target range over the medium term. According to its October forecasts under the baseline scenario, annual inflation will be 5.9 percent in both 2026 and 2027. Compared with the July forecast, the 2026 estimate was lowered by 0.2 percentage points, while the 2027 estimate was raised by 0.1 percentage points.

The bank said inflation risks are mainly linked to the international environment. Amid global geopolitical uncertainty, there is a significant risk that rising energy and food prices will be passed on to domestic prices through major trading partners. The scale of this pass-through will depend, among other factors, on the dynamics of the manat's nominal effective exchange rate. The baseline scenario assumes that state-regulated prices and tariffs remain at current levels.

The CBA noted that annual inflation is within the 4±2 percent target range. In September 2026, 12-month inflation was 5.5 percent, 0.2 percentage points lower than in August. Annual price growth was 6.9 percent for food, alcoholic beverages and tobacco, 5.1 percent for paid services and 3.6 percent for non-food goods. Annual core inflation stood at 4.9 percent. The bank added that under current fiscal, tax and monetary policies, no significant inflationary pressure from domestic demand is expected.