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IHS Global Insight
January 14, 2015
Armenian inflation accelerates at end-2014, trend is likely to continue
The latest inflation results published by the National Statistical
Service show that Armenian consumer prices in December increased by
4.6% year on year (y/y), inflation thus markedly accelerating compared
with the respective November and October rates of 2.6% y/y and 2.2%
y/y. Month-on-month (m/m) inflation accelerated to 3.0% from 1.3% m/m
in November. As is typical for Armenia, food costs to a great degree
determined overall inflation developments; food prices ended the year
by jumping by 6.2% y/y and 5.6% m/m in December. Prices of paid
services rose by 3.0% y/y, while the gain of 1.6% y/y of non-food good
prices represented the lowest increase among the key price categories.
These developments brought the average consumer price inflation rate
for 2014 to 3.0%, following 5.8% in 2013. For last year as a whole,
service prices posted the fastest gain (5.1%), while the prices of
food and non-food goods both increased by 1.7% on average from 2013.
Significance:Armenian consumer price inflation now has reached the
target range of the Central Bank of Armenia (CBA), which is set around
a central goal of 4% with a fluctuation band of 1.5 percentage points
on either side, having remained clearly below it for most of the year.
Inflation is likely to continue accelerating in the coming months and
quarters. Even as the low international oil prices and the overall
weakness of the economy have an opposite impact, we believe that the
depreciation of the dram will be the decisive factor in the near
future in determining the key inflation developments in Armenia.
Driven by contagion from the weakened Russian rouble, the AMD/USD
exchange rate depreciated by 17.5% over 2014, and by 10.0% during
December alone. The country is very dependent in imports, also for
staple goods, and the weaker dram will have an upward impact in import
prices measured in domestic currency. There is a considerable risk
that Armenian inflation may even exceed the target this year. The
increased inflation expectations were also reflected in the recent
interest rate rise decision taken by the central bank, while the
downward pressures on the dram have resulted in the CBA implementing
currency market interventions.
From: Emil Lazarian | Ararat NewsPress
January 14, 2015
Armenian inflation accelerates at end-2014, trend is likely to continue
The latest inflation results published by the National Statistical
Service show that Armenian consumer prices in December increased by
4.6% year on year (y/y), inflation thus markedly accelerating compared
with the respective November and October rates of 2.6% y/y and 2.2%
y/y. Month-on-month (m/m) inflation accelerated to 3.0% from 1.3% m/m
in November. As is typical for Armenia, food costs to a great degree
determined overall inflation developments; food prices ended the year
by jumping by 6.2% y/y and 5.6% m/m in December. Prices of paid
services rose by 3.0% y/y, while the gain of 1.6% y/y of non-food good
prices represented the lowest increase among the key price categories.
These developments brought the average consumer price inflation rate
for 2014 to 3.0%, following 5.8% in 2013. For last year as a whole,
service prices posted the fastest gain (5.1%), while the prices of
food and non-food goods both increased by 1.7% on average from 2013.
Significance:Armenian consumer price inflation now has reached the
target range of the Central Bank of Armenia (CBA), which is set around
a central goal of 4% with a fluctuation band of 1.5 percentage points
on either side, having remained clearly below it for most of the year.
Inflation is likely to continue accelerating in the coming months and
quarters. Even as the low international oil prices and the overall
weakness of the economy have an opposite impact, we believe that the
depreciation of the dram will be the decisive factor in the near
future in determining the key inflation developments in Armenia.
Driven by contagion from the weakened Russian rouble, the AMD/USD
exchange rate depreciated by 17.5% over 2014, and by 10.0% during
December alone. The country is very dependent in imports, also for
staple goods, and the weaker dram will have an upward impact in import
prices measured in domestic currency. There is a considerable risk
that Armenian inflation may even exceed the target this year. The
increased inflation expectations were also reflected in the recent
interest rate rise decision taken by the central bank, while the
downward pressures on the dram have resulted in the CBA implementing
currency market interventions.
From: Emil Lazarian | Ararat NewsPress