Inflation 29% in 2007 - researchers

Inflation made up about 29% in Azerbaijan in 2007, a local research group has said, despite government projections citing a figure twice below that level.

The consumer price index rose 28.96%, with a 30.04% increase registered in the capital Baku and 27.58% in the country’s regions, according to the Economic Research Center (ERC) that calculates inflation using alternative methods.

Head of the center Gubad Ibadoglu said the highest price hikes were observed in fees on services – 40.28%, while food industry prices rose 28.12%. The lowest increase was registered in prices on other goods – 21.81%.

Inflation soared the most in January due to the hike in energy prices ordered by Azerbaijan’s body in charge of pricing. Price hikes subsided in the ensuing months, Ibadoglu said.

On January 6, 2007 the Tariff Council raised domestic prices on gasoline by some 50%, while those on other types of fuel - by 25% and electricity three-fold.

The research was conducted on 585 commodities and covered nine economic zones and 22 districts of the country.

Drawing up forecast for 2008, Ibadoglu said inflation in Azerbaijan will hit record highs in the Commonwealth of Independent States. “According to projections for this year, the figure will make up at least 16%, the highest level among CIS states.”

The expert added that price levels will be affected by both internal and outside factors.

Government experts predict inflation at 12-14% in 2008.

The alternative inflation project, funded by the U.S. Agency for International Development (USAID), aims to calculate an inflation rate to support the government in evaluating how inflation affects average household income and expenditure, and overall welfare in the country. ERC says its findings have resulted in bolstering the government’s anti-inflation policy.*