Due to the negative growth of the world prices, the European analysts revealed tendencies coinciding with these processes: due to sharp price increase for food and energy resources, the Europeans need to prune their expenses. It is testified by the statistics. According to the data by the European Statistic Agency Eurostat, the amount of the retail trade in the zone of single European currency in March 2008 decreased by 0.4%, and in 27 countries of the European Union - 0.7%.
This tendency is not new for Azerbaijan. Observing the economic processes over the past three years, it is possible to see that the Azerbaijani citizens also sustain price increase like the Europeans.
2005
The growth rate of the consumer prices in Azerbaijan made up 9.6% as a result of 2005. The average yearly rate of inflation made up 6.7% in 2004 whereas the figure totaled 2.2% in 2003. The key factor for acceleration of the inflation was the growth of deficit in the Public sector. In addition, the inflation resulted from imperfect competition in the food market, artificial manipulation of prices for the construction materials, increase in retail prices for the natural gas and oil products.
Source: State Statistics Commitee
In addition, the incomes of Azerbaijan population increased. Thus, as a result of 2005 the nominal incomes of population increased by 27% as compared to 2004 and totaled AZN 7792.3mln. The growth rate of the incomes increased by 6.3%.
Source: State Statistics Committee
It is possible to say that the consumer demand as a result of 2005 also was high. As compared to 2004, the amount of retail trade turnover increased by 13% and community services by 26.1%.
Source: State Statistics Committee
The structure of expenditure of population in 2005 seems to be as: 70.3% of community incomes were spent on purchase of commodities and services, 5.1% - obligatory payments, 24.6 - savings. As compared to 2004, the community expenses for the taxes increased by 4% due to increase of tax tariffs for social insurance and increase of communal expenses for gas and water. In addition, 1.5% growth was recorded for purchase of foreign currency and it was insurance against denomination of manat. Increasing their expenses in these two directions, the Azerbaijanis also decreased their expenses on purchase of commodities and services in 2005 as compared to 2004. The expenses in this direction decreased insignificantly only by 0.7%.
Source: State Statistics Committee
2006
In 2006 the rates of inflation growth made up 8.3% as compared to the same period of 2005. The amount of retail trade turnover increased by 13.5% and paid services by 42.1% as compared to 2005. The growth rates increased both with regards to the retail trade turnover and paid services.
Source: State Statistics Committee
However, the sharp growth of the consumer prices in December 2006 by 11.4% as compared to December 2005 affected Azerbaijani consumers as well. Thus, the prices for foodstuffs increased by 16.1% in December as compared to December 2005. The growth for January-December 2006 made up 11.9% as compared to the same period of 2005. The price increase for non-foodstuffs was more insignificant than the foodstuffs.
Source: State Statistics Committee
As a result of 2006, the nominal revenues of Azerbaijan population made up AZN 9949.8mln, an increase of 23.4% from the figures of 2005.
Source: State Statistics Committee
This factor affected the structure of expenditures of Azerbaijani population. Thus, the Azerbaijani population spent their profits as following: 68.9% on commodities and services, 11.6% - payment of taxes, social and insurance fees, 19.5% - savings.
Source: State Statistics Committee
2007
In 2007 the rates of inflation growth made up 16.7% as compared to 2006 when the figure totaled 8.3%. Considerable rise in the growth pace of inflation was caused by intensification of the growth pace of prices of all goods, particularly services. It is linked with the resolution by the Tariff Council, dated 8 January 2007, on increase of prices of energy resources and transport fairs. Thus, in 2007 the food prices rose by 16.2% as compared to 2006. The prices of non-food products increased 10.5%. The service prices rose 25.3%.
Source: State Statistics Committee
Thus, growth rate of consumer demand continues drop. The retail good turnover rose by 15.3%, while the community services grew 33.8%. The growth rate of retail goods turnover and commercial services increased in 2006, when the rise comprised 13.5% and 42.1% respectively
Source: State Statistics Committee
As a result of 2007, the nominal incomes of the population rose 40.3%, and comprised AZN 14 305.6mln. The nominal incomes increased by 13.8% as compared to last year.
Source: State Statistics Committee
In 2007 the community expenses were distributed in the following way: 65.5% on purchase of goods and services, 10.1% - obligatory payment and fees, 24.4% - purchase of foreign currency and increase of savings.
Source: State Statistics Committee
If the inflation continues at this level, purchasing capacity of Azerbaijan population may sharply decrease.