Prime Minister Karen Karapetian played down recent increases in the prices of fuel and some foodstuffs in Armenia on Wednesday, insisting that inflation has remained low in the past year amid faster economic growth.
“Everything must be put into context,” Karapetian said during the Armenian government’s question-and-answer session in the parliament. “Our official inflation rate [in 2017] is 2.6 percent. It’s 6.7 percent in Georgia and 7.9 percent in Azerbaijan.”
“You are saying that inflation is terrible, but I’m saying that it’s not,” he told opposition lawmakers who again expressed serious concern about the price increases and blamed the government for them.
Karapetian specifically made clear that he sees “no big problem” arising from more than 10 percent rises in the prices of gasoline, diesel fuel and liquefied natural gas that followed the entry into force on January 1 of new tax legislation mandating higher excise duties on fuel.
The premier claimed that gasoline sold in Armenia is still cheaper than in Georgia. He suggested that those Armenians who cannot afford it switch to liquefied gas which already powers most vehicles in the country.
“If I’m not mistaken the gas price rose by 25 drams … and the [higher] price that existed in 2015 has been restored,” he went on. “It’s not good that the gas price went up. It would have been good if it had remained unchanged.” But the increased price is “not a new challenge in the market,” he added.
Karapetian did acknowledge that the higher diesel price could push up the cost of domestically grown agricultural products. He said the government is considering providing more subsidies to farmer using diesel for their tractors and other equipment.
The premier also defended the higher taxes on fuel as well as alcohol and tobacco, saying that the government needs more revenue to boost its expenditures and repay foreign loans without widening the budget deficit.
“Obviously raising the tax burden is not a pleasant thing,” he said. “But we have external loan [repayment] obligations. We have the task of developing the economy. We need additional means.”
The remarks were denounced by deputies from the opposition Yelk alliance. One of them, Edmon Marukian, accused Karapetian of ignoring the socioeconomic impact of the price hikes.
“You are close to saying that there is also an alternative to public transport and people should commute on foot,” said Marukian.
Another Yelk lawmaker, Ararat Mirzoyan, argued that food products such as butter and meat have also become considerably more expensive in recent months. Karapetian countered that their prices have soared all over the world.
Yelk announced on January 8 that it will rally supporters in Yerevan on January 19 to protest against the increased cost of living. Two days later, President Serzh Sarkisian held an emergency meeting with senior officials during which he voiced concern at the price hikes. Sarkisian told anti-trust regulators to consider taking “drastic measures” against a small number of companies importing fuel and basic foodstuffs to Armenia.
Karapetian was officially on vacation from January 8-12 and did not attend the meeting held in the presidential palace.