Rising butter and vegetable-oil prices in Azerbaijan could push up the cost of baked goods, cookies, cakes, confectionery, semi-prepared foods and restaurant products, economist Asif Ibrahimov said.
Ibrahimov linked the risk to higher production costs and the market’s dependence on imports, according to Demokrat.az.
He said higher oil and butter prices affect not only household spending but also the production costs of foods that use those ingredients.
Vesti Baku previously reported specific examples of the increase. One shopper said butter that had cost 18.80 manats, or about $11.06, rose to 23.90 manats, or about $14.06. The increase was 5.10 manats, or about 27%. Other shoppers reported products rising from 25 to 30 manats. Some consumers have shifted to smaller 200- to 250-gram packages to reduce the amount paid at one time.
Ibrahimov warned that higher production expenses could trigger further price increases.
“When producers include higher costs in the price, the increase spreads to other goods,” he said. “Because food accounts for a large share of household budgets, this process particularly reduces the purchasing power of low-income families.”
Domestic production does not fully cover demand, he said, leaving Azerbaijan exposed to changes in global prices, transportation costs and import conditions.
Import duties and other charges become part of an importer’s costs and then flow into wholesale and retail prices. Ibrahimov said high import duties can weaken competition, make imported goods more expensive and limit consumer choice when domestic output cannot meet demand.
He called for an examination of the entire pricing chain, from importation to the store shelf. A comparison of the same Belarusian butter sold in Georgia and Azerbaijan should account for tariffs, value-added tax, logistics, insurance, currency costs and distributor markups, he said.
Ibrahimov said authorities should review import tariffs on essential foods, consider temporary customs relief when needed and measure whether such steps actually lower consumer prices.
Support for domestic producers should also be tied to results, including output, productivity, production costs and reduced dependence on imports, he said.
“If state support exists but the market remains dependent on foreign products, there are legitimate questions about how effective that support is,” Ibrahimov said.
Originally published in Russian by Vesti Baku.