CBA has kept its inflation forecast for 2023

12:05 - 29.03.2023

March 29, Fineko/ In 2023, the Central Bank of Azerbaijan has kept its annual inflation forecast at 8%, ABC.AZ reports with reference to CBA’s decision of monetary policy.

"In February 2023, annual inflation in Azerbaijan made up 14.1%, which is 1.5 p.p. lower than the peak of 15.6% in September 2022," the CBA says.

The CBA notes that despite the fact that the domestic market is experiencing a decline in inflation from peak indicators, uncertainty remains regarding the expected changes in supply and demand factors and the behavior of economic entities.

"Under conditions of stimulating fiscal policy and growth of foreign exchange earnings in the country, there is an expansion of aggregate demand and high growth rates of the non-oil sector remain. The growth in demand, in particular, is influenced by the 4th social package from the beginning of 2023 (an increase in salaries for state employees and benefits) and an increase in credit activity. The annual growth of the loan portfolio of banks and non-bank credit institutions has slowed down slightly, but still remains high - 15.7% in February 2023. In addition, inflation may be affected by the revision from the beginning of 2023 of a number of tariffs for goods and services regulated by the state. These factors influence the fact that actual inflation may be higher than predicted. Nevertheless, the Central Bank is still maintaining the baseline scenario for 2023, according to which annual inflation in Azerbaijan will be in the range of 8%," the CBA said.