Baku: Inflation in Azerbaijan is anticipated to average 5.0% over the next decade, according to a report by Fitch Solutions, as reported by APA-Economics. Over the past ten years, inflation in the country has averaged 5.5%, but it is expected to decrease slightly over the forecast period through to 2033. According to Azeri-Press News Agency, the report highlights that consumer price inflation in Azerbaijan has reached historic highs, primarily due to rising food prices and supply chain disruptions caused by the Russia-Ukraine war. Despite these challenges, prices are expected to gradually retreat in the coming years. The local currency, supported by strong oil and gas inflows, is not anticipated to face major stress. Inflation is projected to revert to trend over the long term, with the exchange rate remaining mostly stable. The Central Bank of the Republic of Azerbaijan (CBA) has an inflation target band of 2.0-6.0% and focuses on ensuring price stability through exchange rate control. Price pressures have been elevated throughout 2022 and early 2023, and inflation is expected to remain above target until early 2024, despite the stability of the manat, due to ongoing food supply issues linked to the Russia-Ukraine conflict. However, the CBA has reportedly improved its control over inflation compared to 2015, when the country had to significantly devalue its currency following a global oil price collapse, placing stress on its balance sheet. Still, the high level of dollarisation in the economy, with 48.4% of bank deposits in foreign currency, means that monetary policy transmission is less effective, potentially causing inflation to remain persistent. The CBA has outlined a four-year plan to transition fully to an inflation-targeting monetary policy by 2026, which could lead to the manat trading more freely in the currency market by then.