It has been determined that changes in the prices of imported food products in Azerbaijan precede food inflation in the domestic market by approximately 2 months.
“Elchi” reports that this result is reflected in the research paper titled “Construction and Forecasting of the Imported Food Price Index in Azerbaijan,” prepared by Central Bank of Azerbaijan employees Təmkin Nuriyev, Aygün Qarayeva, and Gülzar Tahirova.
Within the framework of the study, data from approximately 800,000 customs operations covering the period from January 2018 to February 2026 were analyzed. Based on this, the Imported Food Price Index (IFPI) was developed, covering 34 food products included in the consumer basket that are significantly dependent on imports.
According to the research results, the highest correlation between the new index and the official food consumer price index was recorded at 0.81, and this indicator was observed with a two-month lag. In other words, changes in import prices are more clearly reflected in retail food prices approximately two months later.
The study notes that customs data is released on average 20–25 days after the reporting month, while official food inflation indicators are released 10–15 days after the end of the month. Considering this difference, the new index creates an information advantage of approximately 6–7 weeks relative to the official food price indicator. This may allow for earlier identification of inflationary pressures.
In the study, a forecasting model for imported food prices was also developed using machine learning methods. The model’s average directional accuracy was 72.22%, and its average forecast superiority compared to the random walk model was 58.1%.
According to the authors, the use of the imported food price index in the Central Bank’s broader inflation forecasting models could increase the accuracy of short-term food inflation forecasts.
It should be noted that food products account for approximately 43% of the consumer basket in Azerbaijan. The authors of the study state that because a significant portion of food consumption in the country depends on imports, domestic prices are sensitive to international commodity prices and global supply shocks.