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Inflation Rate To Jump To 5% In Armenia

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  • Inflation Rate To Jump To 5% In Armenia

    INFLATION RATE TO JUMP TO 5% IN ARMENIA

    ARKA News Agency, Armenia
    Oct 16 2006

    YEREVAN, October 16. /ARKA/. The inflation rate, planned for 2006
    in the state budget, will increase to 5%, Vardan Aramyan, head of
    the department for foreign economic relations of the Central Bank of
    Armenia reported at the hearings on the AMD exchange rate in 2005-2006,
    organized by the Anti-criminal movement He said that the inflation has
    been planned at the level up to 3% for 2006, but the abrupt reduction
    of harvests in the agriculture resulted in decrease in supply and
    price rise, particularly for potato by 40%.

    "Taking into account the price rise on international markets, we cannot
    oppose the inflation with our limited resources, and keeping it at
    a lower level can jeopardize the country's economy," Aramyan said.

    He reported that it is planned to amend the law and make the planned
    level of inflation higher.

    "Otherwise, the Central Bank would have to resort to more rigid
    measures, and it is not ruled out that as a result, the AMD revaluation
    would have turned deeper, but such measures are not reasonable in
    the given situation, as the current inflation is 'the inflation of
    supply'," Aramyan reported.

    According to the Central Bank, the inflation will exceed the target
    level of 3% at the end of 2006 (compared to December 2005). Such rise
    of the inflation has occurred first of all due to the strengthening
    external inflation pressures.

    In particular, the risks include the high rate of world prices for
    energy carriers and other goods (basic metals and granulated sugar)
    that occurred during the year, and also the anticipated reduction of
    grain-crops in Russia and Ukraine.

    At the end of September 2006, the Armenian government approved the
    proposal for amendments to the law "On State Budget of Armenia for
    2006", and suggested that the CBA take measures for keeping the
    inflation in December 2006 at the level of 5% (+- 1.5%) compared to
    the corresponding period of 2005.
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