The National Statistical Service (NSS) registered an annual inflation rate of 8.9 percent in April, down from 11.5 percent and 12.4 percent reported in March and February respectively. It said the composite consumer price index fell slightly in April after rising by 5.2 percent in the first quarter of this year.
NSS data show that April inflation fell primarily because of an almost 4 percent drop in the prices of fruit, vegetable and potatoes. That was partly offset by a further rise in domestic fuel prices resulting from the increased cost of oil in the international market.
The average retail price of petrol in Armenia rose by 4 percent last month. It was up by 15 percent from the December 2010 level.
The Armenian government and the Central Bank say stopping the soaring cost of life, which has hit particularly hard socially vulnerable groups of the population, is one of their chief objectives.
Anti-inflationary measures taken by them include a significant tightening of monetary policy. The Central Bank has raised its benchmark refinancing rate from 7.25 to 8.5 percent since the beginning of February.
Prime Minister Tigran Sarkisian and other Armenian officials have predicted that inflation will fall to 6 percent by the end of the year thanks to robust growth projected in the agricultural sector. They hope that increased supply of domestically grown fruit, vegetables and cereals will slash a 16 percent year-on-year surge in food prices recorded by the NSS in April.
The International Monetary Fund appears to consider these expectations too optimistic. In its global economic outlook released last month, the IMF said full-year inflation in Armenia will exceed 8 percent.
Bagrat Asatrian, a former Central Bank governor critical of the Armenian government, came up with a similar inflation forecast. “Eight or nine percent [inflation] is a desirable figure for our economy in this situation,” he told RFE/RL’s Armenian service on Monday.
Asatrian reiterated his view that the main factor behind the higher-than-expected inflation is not international food and fuel prices but a lack of competition within the Armenian economy. He claimed that the authorities are still doing little to break up de facto economic monopolies.
“The main cause lies in our economic system,” he said. “If we try to remedy the situation with classical methods of fiscal-monetary policy, we will definitely get no results.”