Baku: Changes in the prices of imported food products in Azerbaijan have been found to precede food inflation in the domestic market by approximately two months, APA-Economics reports. This conclusion is reflected in a research paper titled 'Construction and Forecasting of the Imported Food Price Index in Azerbaijan,' prepared by employees of the Central Bank of Azerbaijan, Tamkin Nuriyev, Aygun Garayeva, and Gulzar Tahirova.

According to Azeri-Press News Agency, as part of the study, data from approximately 800,000 customs transactions covering the period from January 2018 to February 2026 were analyzed. Based on these data, the Imported Food Price Index (IFPI) was developed, covering 34 food products included in the consumer basket and significantly dependent on imports.

The results of the study revealed a high correlation between the new index and the official food consumer price index, recorded at 0.81 with a two-month lag. This indicates that changes in import prices are reflected more clearly in retail food prices approximately two months later.

The study notes that customs data are released on average 20-25 days after the reporting month, while official food inflation figures are published 10-15 days after the end of the month. Taking this difference into account, the new index provides an information advantage of approximately six to seven weeks over the official food price indicator, potentially allowing inflationary pressures to be identified earlier.

Additionally, the study developed a model for forecasting imported food prices using machine learning methods. The model achieved an average directional accuracy of 72.22%, while its average forecasting advantage over the random walk model stood at 58.1%.

The authors suggest that incorporating the Imported Food Price Index into the Central Bank's broader inflation forecasting models could enhance the accuracy of short-term food inflation forecasts. It is noted that food products account for approximately 43% of Azerbaijan's consumer basket. Due to the significant reliance on imports for food consumption, domestic prices are sensitive to international commodity prices and global supply shocks.