AZE.US
A new indicator developed by Central Bank of Azerbaijan researchers could identify rising food-price pressure as much as six to seven weeks before it becomes fully visible in official inflation data.
Researchers Tamkin Nuriyev, Aygun Garayeva and Gulzar Tahirova analyzed approximately 800,000 customs transactions conducted between January 2018 and February 2026.
Using the data, they created an Imported Food Price Index, or IFPI, covering 34 products included in Azerbaijan’s consumer basket and substantially dependent on imports.
The study found that changes in import prices were most strongly reflected in retail food prices approximately two months later. The correlation between the new index and the official food consumer price index reached 0.81 with a two-month lag, according to the research findings.
Early Signal, Not a Store-Price Forecast
Customs data are generally released 20 to 25 days after the reporting month, while official food-inflation statistics appear 10 to 15 days after the month ends.
Combined with the two-month transmission period, the import index could warn policymakers of mounting inflationary pressure around six to seven weeks earlier than the official retail-price indicator.
The researchers also developed a machine-learning model that achieved an average directional accuracy of 72.22%. They reported a 58.1% forecasting advantage over a random-walk benchmark.
Food products account for approximately 43% of Azerbaijan’s consumer basket. The country’s reliance on imported food and agricultural inputs makes domestic prices sensitive to international commodity markets, transportation costs and global supply disruptions.
The new index cannot predict the exact future price of bread, meat or vegetables. Instead, it indicates whether overall imported inflationary pressure is strengthening or weakening.
Its inclusion in the Central Bank’s broader forecasting system could improve short-term inflation estimates and give policymakers additional time to respond.
AZE.US