After several consecutive years of decline consumer price inflation in Armenia has soared in the last few months, surpassing a maximum target rate of 5.5 percent set by the authorities for this year.
The National Statistical Service (NSS) reported on Friday that annual inflation increased from 5.2 percent in May to 6.5 percent in June primarily due to rising food prices in the country, which were up by 9 percent year on year.
Data from the NSS shows that the food price index in June was pushed up by an 18 percent surge in the cost of fruits, vegetables and potatoes apparently resulting from relatively bad weather. Weather conditions in Armenia were considerably better last year, one of the reasons why inflation fell to 2.6 percent in 2012, the lowest level since 2005. Inflation eased in 2010 and 2011 as well.
The Armenian government and Central Bank hoped to keep it within a target band of 4 percent (±1.5 percentage points) in 2013. However, these projections were called into question following a 50 percent rise in the price of natural gas imported from Russia, which was announced last month. The development led Armenian utility regulators to allow double-digit rises in the gas and electricity fees for households.
The higher energy tariffs will take effect early next month, meaning that inflationary pressures on the Armenian economy will grow further. Artur Javadian, the Central Bank governor, said earlier this month that they will likely push up the full-year inflation rate by 2 percentage points.