Consumer price inflation in Armenia continued to fall last month amid a seasonal drop in the prices of domestic agricultural products, the latest government data show.
The National Statistical Service (NSS) reported a year-on-year inflation rate of 6.3 percent in July, down from 8.5 percent registered in June and 9 percent in May.
The figure puts the Armenian authorities in a better position to deliver on their repeated pledges to bring full-year inflation close their maximum target rate of 5.5 percent in 2011.
The Armenian consumer price index was up by as much as 11.5 percent in March due to increased international prices of wheat and other imported foodstuffs as well as a 2010 slump in domestic agricultural production caused unusually bad weather.
The agricultural sector is doing better this year. The NSS data show the prices of domestically grown potatoes and vegetables tumbling by an average of 25.6 percent in June and another 35 percent in July. The average cost of fruits was likewise down by 23.3 percent last month.
This translated into an almost 6 percent drop in overall food prices registered by the government agency in July.
These figures are in line with government assurances that better harvests will significantly ease inflation in the second half of the year. Some officials predicted early this year that Armenia’s agricultural output will grow by 10 percent in 2011.
Despite first indications of seasonal deflation, the Armenian Central Bank last month decided to keep its benchmark lending rate unchanged at 8.5 percent. The bank raised the minimum cost of borrowing by a total of 1.25 percentage points in January-February as it scrambled to curb the higher-than-anticipated inflation.
Consumer prices in Armenia already soared by more than 9 percent in 2010, one of the highest inflation rates since the 1990s. Socially vulnerable groups of the country’s population were hit particularly hard by the rising cost of life. It also complicated government efforts to reduce poverty, which rose considerably during the 2009 economic recession.
Samvel Avagian, an economic analyst, on Tuesday downplayed the significance of the latest inflation data. He argued that the national average monthly wage, which the NSS estimated at over 114,000 drams ($310) in June, was up by only 5 percent from the same period of 2010.
“The rise in the average wage is clearly lagging behind the rise in prices,” Avagian told RFE/RL’s Armenian service. “In reality, the gap between the rises in wages and prices is greater,” he said.