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By Shakeh Avoyan
The Armenian government and the Central Bank insisted on Wednesday that inflation was non-existent in Armenia last year despite a widespread sense that the cost of life in the country continued to grow.

Central Bank Chairman Tigran Sarkisian and the head of the National Statistics Service, Stepan Mnatsakanian, stood by official data showing a 0.2 percent deflation in 2005 as they spoke at special hearings on the issue organized by the Armenian parliament. “A drop in consumer prices in the Republic of Armenia was registered last year,” said Sarkisian.

But some lawmakers, including parliament speaker Artur Baghdasarian, strongly questioned the official figure, saying that the prices of key consumer goods did increase in the past year. Many Armenians share that view.

Sarkisian countered that the popular perception is shaped by a sizable rise in the cost of apartments, cars and other goods that are not included in the Armenian authorities’ consumer price index.

“Are there any goods whose prices have gone up drastically?” he said. “Yes, there are such goods and services. But the vast majority of them are not included in the consumer basket and the rise in their prices can not affect the overall rate of inflation.”

The index is calculated on the basis of the average price of 400 foodstuffs and other basic consumer products. It rose by 7 percent in 2004 but was essentially flat last year despite an almost 14 percent rate of economic growth reported by the government. The inflation rate is projected to remain within a 3 percent limit this year.

The Armenian authorities attribute the reported deflation to their tight monetary policies endorsed by the International Monetary Fund and a substantial appreciation of the national currency, the dram, against the U.S. dollar and the euro.

Eduard Aghajanov, the former National Statistics Service chief critical of the current government, found their inflation figures credible. But he criticized the Central Bank’s monetary policy as too restrictive, saying that it suppressed economic activity. “Moderate inflation is not a terrible thing for countries like Armenia,” Aghajanov told RFE/RL.

Sarkisian and other Central Bank officials insist, however, that any price rise would only increase poverty in Armenia and must therefore be avoided by all means.

(Photolur photo: Tigran Sarkisian)
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