Consumer goods and services increased by 11.9 percent in January 2017 in comparison to the same period year-over-year, reports the Azerbaijani State Statistical Committee (SSC).
A 14.5 percent increase in food prices, a 12.3 percent in non-food prices and an 8 percent increase in paid services were also recorded in Azerbaijan’s economy.
In comparison to December of 2016, inflation was 2.3 higher in January of 2017.
Products affected by price hikes included grains, meat, fruits, sugar, oil, coffee, tea and vegetables.
Prices of non-food products, such as fabrics, clothing and footwear, also grew in the period between December 2016 – January 2017.
The reason for the consistent increase in food prices over the last 2 years can be attributed to the devaluation of the manat, experts say.
It is worth noting, however, that despite a recent rise in the worth of the manat against the dollar, prices have not reacted accordingly.
Economist Qubad Ibadoglu says that given the direct link between price increases and the devaluating manat, there should have been the opposite effect as well. However, this has not happened.
Ibadoglu says that the increase in prices is likely linked to the authoritarian and monopolist position of large Azerbaijani companies on the market:
“If state-controlled companies do not decrease petrol and gas prices following the devaluation of the manat, why should the private sector be expected to obey these laws of economics? Prices are not decreasing because no one believes in the long-term stability of the manat. Their expectation is that manat will continue to lose value. Because imported foods and household goods are a part of the monopoly or “oligopoly” of the companies importing and selling these products in Azerbaijan, they are able to keep their control over prices. Most of these companies belong to oligarchs and public officials, and they are benefiting even more from the exchange rate difference.
“All this shows that there is no competitive market in the country. Consumer prices will continue to go up. The only solution is to liberalize the market and turn completely to a free-market economy”, Ibadoglu says.