By the end of 2022, inflation in Armenia will decrease to 4 +/-1.5%:  Candidate for Deputy Governor of Central Bank

ArmInfo.By the end of 2022, inflation in Armenia will decrease to 4 +/-1.5%. Hovhannes Khachatryan, candidate for the post of Deputy Governor of the Central  Bank of Armenia, stated this on January 18 at the discussions in the  National Assembly.

Khachatryan recalled that in January-December 2021, inflation  increased to 7.7%, and cumulative inflation was 7.2%. At the same  time, according to him, fluctuations in the exchange rate affected  inflation slightly - within 0.25% - 0.5%.

The rise in world food and energy prices has had a much more  significant impact, as the FAO's (Food and Agriculture Organization  of the United Nations) food price index has risen by more than 20%  over the past year. The rise in prices for energy resources, in  particular for gas, did not affect Armenia, since the republic  imports blue fuel at a fixed price. However, the rise in world prices  for energy carriers, gas and oil, is taken into account in the  formation of prices for many imported goods. As a result, the cost of  goods is growing, which of course affects inflation in Armenia  itself.  Regarding the internal reasons for the growth of the  consumer price index (CPI), the expert pointed to a reduction in the  potential for economic growth due to an increase in the death rate of  the population due to the pandemic, war and a number of other  reasons. And with a reduction in the economic potential, even in the  conditions of maintaining a similar demand, an increase in inflation  is recorded, Khachatryan explained.  According to him, the increase  in electricity prices, which will come into force on February 1, is  estimated at an average of 4.7%. "The share of this factor in the CPI  will be 5%, for the price of gas such an analysis has not yet been  carried out, since there is no information (it is not known how much  the price of gas will rise - ed. note)",  the representative of the  Central Bank said.

It should be noted that according to statistical data, on a y-o-yt  erms  (compared to January-December 2020), inflation of 7.2% was  recorded on the consumer market (against inflationary 1.2% a year ago  and 1.4% two years ago), which was facilitated by a significant rise  in prices by 11% of food products and a slightly less significant  increase in prices by 8.7% of non-food products, with an increase in  tariffs for services by 1.9%. These data are significantly different  from the inflationary picture of a year ago (January- December 2020  to January-December 2019), when almost the same slight increase in  prices by 1.2-1% was recorded in the markets of food and non-food  products, with an increase in tariffs for services by 1.4%. In  December 2021, an increase in consumer prices by 1.6% was accompanied  by a devaluation of the dram against the dollar by 1.6%, and in  January-December, against the backdrop of inflation of 7.7%, there  was a revaluation of the dram against the dollar by 6.5%. As a  comparison, we note that a year earlier, in December 2020, inflation  in the consumer market of 3.4% was accompanied by a devaluation of  the dram against the dollar by 3.9%, and in the conditions of 3.7%  inflation in January-December 2020, , the devaluation of the dram  against the dollar amounted to 8.5%. 

The estimated exchange rate of the dram against the dollar in  November 2021 averaged 485.1 AMD/$1, being 6.5% lower than a year ago  (518.9 drams/$1), but still exceeding the level of December 2019  (478.2 AMD/$1). $1).