Will prices fall in Azerbaijan if they are "monitored"?

In a high-level meeting chaired by Rufat Mammadov, head of the Office of the Cabinet of Ministers of Azerbaijan, on December 14, concerns over price levels and strategies to combat inflation took center stage. The backdrop of global economic dynamics and local intricacies shaped the discourse, with particular attention paid to the recent 10.6% drop in the food price index reported by the Food and Agriculture Organization of the United Nations (UN) in November.

Azerbaijan has seen a commendable reduction in inflation, registering approximately 4% less compared to the preceding year. Despite this positive trend, some local experts question the depth of this decline when juxtaposed with global patterns. The Center for Analysis of Economic Reforms and Communication presented a methodological framework document on the "Price Tracking Application," suggesting the establishment of a working group comprising relevant representatives to address these challenges.

Vahid Ahmadov, a Member of the committee on Economic Policy, Industry, and Entrepreneurship of the Milli Majlis, in an interview with Turan underscored the government's commitment to anti-inflationary measures. He highlighted the role of the Antimonopoly Service of the Ministry of Economy in monitoring and providing information on prices. Ahmadov acknowledged the global dip in the food price index but contended that Azerbaijan hasn't experienced a comparable drop, citing specific rural products as exceptions.

However, economist Natig Jafarli offered a critical perspective on Azerbaijan's economic landscape. In an interview with Radio Azadlig, he observed a peculiar trend where global price fluctuations seem to disproportionately influence local prices. Jafarli argued that the country's reliance on imports isn't a sufficient explanation, pointing to structural and systemic issues within the economy.

Jafarli raised concerns about a monopoly in Azerbaijan, particularly within the wholesale market, where a handful of powerful players to dictate prices. He emphasized the need for a competitive environment and criticized the existing legislation that inhibits price adjustments in retail outlets. According to him, the import monopoly, dominated by a few major companies, stands out as a primary culprit.

The economist argued for a more comprehensive and nuanced approach to price dynamics, suggesting that a competitive market, not arbitrary interventions in retail, is the key to fostering fair pricing. The adoption of the Competition Code in 2024 is anticipated to bring about stability in prices, but until then, Azerbaijan grapples with the challenge of aligning its economic policies with global trends while addressing domestic structural issues. As the nation aims for economic resilience, the role of a competitive marketplace becomes increasingly pivotal in determining the trajectory of inflation and pricing.