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Armenian Inflation Falls To Single Digits

Armenian Prime Minister Tigran Sarkisian has predicted that inflation will fall to 6 percent by the end of the year.
YEREVAN -- Consumer price inflation in Armenia eased for the second consecutive month in April but still remained well above the maximum level targeted by the authorities, RFE/RL's Armenian Service reports.

The National Statistics Service on May 2 registered an annual inflation rate of 8.9 percent in April, down from 11.5 percent and 12.4 percent reported in March and February, respectively.

It said the composite consumer-price index fell slightly in April after rising by 5.2 percent in the first quarter of this year.

Statistics Service data shows that April inflation fell primarily because of an almost 4 percent drop in the prices of fruit and vegetables.

That was partly offset by a further rise in domestic fuel prices resulting from the increased cost of oil on the international market.

The average retail price of gas in Armenia rose by 4 percent last month. It has risen by 15 percent since December 2010.

The government and the Central Bank say stopping the soaring cost of living, which has particularly affected lower economic classes, is one of their chief objectives.

Anti-inflationary measures taken by officials include a significant tightening of monetary policy. The Central Bank has raised its benchmark refinancing rate from 7.25 to 8.5 percent since the beginning of February.

Prime Minister Tigran Sarkisian and other officials have predicted that inflation will fall to 6 percent by the end of the year thanks to significant growth projected in the agricultural sector.

They hope that an increased supply of domestically grown fruit, vegetables, and cereals will slash a 16 percent year-on-year surge in food prices recorded by the Statistics Service in April.

Others Less Optimistic

The International Monetary Fund (IMF) seems to consider these expectations too optimistic. In its global economic outlook released last month, the IMF said full-year inflation in Armenia would exceed 8 percent.

Bagrat Asatrian, a former Central Bank governor who is critical of the government, came up with a similar inflation forecast.

"Eight or nine percent is a desirable figure for our economy in this situation," he told RFE/RL on May 2.

Asatrian reiterated his view that the main factor behind the higher-than-expected inflation was not international food and fuel prices but a lack of competition within the Armenian economy.

He claimed that the authorities are still doing little to break up de facto economic monopolies.

"The main cause lies in our economic system," he said. "If we try to remedy the situation with classical methods of fiscal-monetary policy, we will definitely get no results."