ArmInfo."Certain processes in the service sector lead us to believe that we have not yet won a final victory in the fight against inflation," Governor of the Central Bank of Armenia, Martin Galstyan said during a press conference today.
"If in the context of goods we see a decrease in prices, then in the service sector inflation is above the target threshold. In particular, for certain types of services, inflation ranges from 6% to 12%, due to high external demand, as well as rising wages in our country," he said. In this regard, the head of the Central Bank stressed that wage growth rates in a number of areas outstrip not only real GDP growth rates, but also productivity, and this carries a high potential for inflation. Galstyan, in particular, noted that non-residents who moved to work in Armenia in the IT field receive high wages.
Martin Galstyan mentioned inflationary expectations, which remain at a high level, as another reason for concern. As he said, combining all these factors, the Board of the Central Bank decided to leave the refinancing rate unchanged, hoping that this would have a restraining effect on external demand. "As a result, with the expiration of time, we will see a reduction in prices for services, which will allow us to return to an expanded monetary policy," the head of the Central Bank noted.
He assured that the Regulator will continue to take steps and create conditions to bring inflation closer to the target threshold (4%) in the medium term.
According to statistics in March 2023, the official y-o-y inflation in the consumer market of Armenia decreased to 5.4% from the y-o-y inflation rate of 7.4% in March 2022. And the core y-o-y inflation calculated by the Central Bank in March 2023 decreased to 6.4% from the y-o-y inflation rate of 7% in March 2022. According to statistical data, in January-March 2023 compared to the same period in 2022, the industrial products price index decreased by 0.4%, and by 0.7%, in March alone, and by 2.7% in March 2023 compared to March 2022. A year earlier, in comparable periods, the industrial products price index showed an increase: by 11.3% per annum in January-March 2022, by 2%in March, by 12.5% compared to March 2021. According to the March forecast of the Central Bank, inflation in 2023 will decrease to 4.4% (from the actual 8.6% in 2022), with stabilization at the target level (4%) in the next two years. At the same time, regarding GDP for 2023, the Central Bank forecasts a slowdown in growth to 5.8% (from actual 12.6% in 2022), with continued losses in rates in the next two years - up to 5.2% in 2024 and up to 4.9% in 2025.