By Atom Markarian
The prices of key consumer goods in Armenia have stopped growing this year due to a seasonal deflation and a major strengthening of the national currency, the dram, officials said on Wednesday.According to macroeconomic data released by the National Statistics Service, the overall consumer price index has fallen by 0.5 percent since December, putting the Armenian government on track to keep inflation within a 3 percent limit in 2004.
The government and Armenia’s Central Bank failed to meet the same target last year when the inflation rate hit 8.6 percent. Officials blamed the increase on last summer’s sharp rise in the price of bread which triggered other food price hikes.
The latest government figures show the key consumer price index falling by 5 percent during the last three months. Mariam Yeritsian, a senior official from the statistics agency, attributed that to a traditional seasonal drop in the prices of fruit and vegetables that become increasingly abundant in the course of the summer.
Yeritsian told RFE/RL that inflation has been virtually non-existent this year also because the dram has gained 8 percent in value against the U.S. dollar and other major world currencies since December, making Armenian imports cheaper.
One of the most important commodities imported to Armenia is fuel. Its retail price has hardly changed this year despite the skyrocketing cost of oil in the international markets. Fuel importers say the stronger dram has allowed them not to charge consumers more.
The dram’s strengthening led some economists to allege exchange rate manipulation by the authorities. According to one conspiracy theory, the Armenian authorities boosted the value of the national currency to prevent further highly unpopular price increases.
However, the Central Bank has repeatedly dismissed such speculation, saying that its exchange rate policy is strictly market-based.