Consumer price inflation in Armenia has fallen below the maximum target rate of 5.5 percent that was set by the authorities for 2011, according to the latest official data released on Friday.
The National Statistical Service (NSS) said year-on-year inflation eased to 4.7 percent this month, down from 9.4 percent reported in December 2010. It thus reached its lowest level since 2005.
The figure stood at 8.5 percent as recently as in June 2011 not least because of increased international prices of wheat and other imported foodstuffs. Lingering effects of a 2010 slump in domestic agricultural production, caused unusually bad weather, were also a major factor.
The Armenian agricultural sector has performed much better this year. This translated into a food price deflation in the summer, which in turn helped to suppress consumer price increases in the second half of the year.
The NSS data shows that year-on-year inflation eased further in December even though food prices were up by an average of 4.8 percent from the November level. The prices of vegetables alone jumped by 36 percent mainly because of seasonal factors.
The second-half fall in the consumer price index came amid accelerating economic growth. According to the NSS, Armenia’s Gross Domestic Product rose by 6.5 percent in the third quarter of 2011, putting the government on track to meet its full-year growth target of 4.6 percent.
Responding to weakening inflationary pressures, the Armenian Central Bank cut its refinancing rate by 0.5 percentage points to 8 percent in September. It raised the benchmark rate by a total of 1.25 percentage points earlier this year.