ArmInfo.One of the main sources of supply inflation in Armenia is people who arrived from Russia and other countries and created additional demand for goods and services in the consumer market. Chairman of the Central Bank of Armenia Martin Galstyan stated this at the meeting of the RA NA Standing Committee on Financial-Credit and Budgetary Affairs.
"It is very difficult to fight supply inflation, being a country with a small open economy. We are concerned about the fact that such a phenomenon exists in Armenia," the head of the Central Bank said.
In this regard, he noted that inflation in Armenia is formed due to the import of goods into the country, the prices for which have increased on the foreign market, and as a second phenomenon, Galstyan pointed to the level of consumption exceeding production capabilities.
Recalling the trends in 2021, he noted that the Regulator expected inflation to return to the target threshold in Q2 2022. "However, as a result of the Russian-Ukrainian conflict, prices for goods that should not have risen have increased," he said. In particular, Galstyan noted that 30% of the supply of wheat and 65% of sunflower oil to the world market falls on Russia and Ukraine. "Why are these goods important in terms of inflation? Because they occupy a significant share in our consumer basket. Their rise in price leads to higher inflation, the same can be said about corn, barley and other fertilizers," he said.
In general, Galstyan stressed that due to recent events, prices for all goods have risen sharply. "The FAO index grew by almost 50% during the year," he concluded.
It should be noted that according to statistical data, y-o-y inflation in the consumer market of Armenia in June 2022 increased to 10.3% (from 6.5% a year earlier). In particular, food products (including alcohol and cigarettes) rose in price by 16.1%, non-food - by 7.5%, and tariffs for services increased by 5.3%. As a comparison, we point out that a more restrained rate of rise in prices was observed a year earlier (June 2021 to June 2020) - food and non-food products by 8.8-9.5% and an increase in tariffs for services by 2.1%. And according to the Central Bank of the Republic of Armenia, the core y-o-y inflation in June 2022 increased to 9.4% (from 7.8% a year earlier).
According to the RA Statistical Committee, in H1 2022 alone, inflation in the consumer market amounted to 6.3% (against 3.8% inflation in the first half of 2021), which was provoked by an increase in the price of food products by 8.9%, non-food - by 4. 6%, and an increase in tariffs for services by 4.4%. As a comparison, we note that in H1 2021, there was also an increase in the price of food products by 5.6%, non- food - by 5%, with a meager 1% increase in tariffs for services. The average monthly increase in consumer prices in H1 2022 amounted to 1%, against an increase of 0.6% a year earlier.
