Inflation Forecast for 2026

The Central Bank of Azerbaijan (CBA) has announced its expectations for the annual inflation rate by the end of 2025 and in 2026. According to the CBA, the inflation rate is expected to remain within the target range.

Expected Inflation Rates

The October forecast for the base scenario indicates that the inflation rate in 2025 will be around 6%, and in 2026, it will be approximately 5.7%. The upward revision of these indicators is mainly related to the impact of supply factors on the market.

External Risks to Price Stability

The main external risk to price stability remains the dependence of domestic inflation on the dynamics of import prices. These import prices are determined by inflationary processes among trading partners and changes in the manat exchange rate. Global economic instability continues to cause fluctuations in commodity and financial markets, which can affect the inflation rate.

Internal Factors Influencing Inflation

Among internal factors, the CBA highlights that inflation in the upcoming period will be formed mainly under the influence of costs and supply factors. However, preliminary budget parameters for 2026 and the slowdown in lending rates reduce the risk of excessive growth in aggregate demand, which can help keep inflation in check.

Conclusion

In conclusion, the Central Bank of Azerbaijan expects the inflation rate to remain within the target range by the end of 2025 and in 2026. While there are external risks to price stability, such as global economic instability, internal factors like costs and supply factors will mainly influence inflation. The CBA’s forecast provides valuable insights into the expected inflation rates and the factors that will shape the economy in the upcoming period.