According to the Armenian government’s Statistical Committee, soaring food prices remained the key factor behind the increased cost of living. They were up by an average of 17 percent year on year.
The Statistical Committee reported an almost 46 percent surge in the average cost of vegetables mostly grown in the country. It said the prices of bread and beef were up by about 20 percent from June 2021.
Economy Minister Vahan Kerobian admitted on Thursday that the much higher-than-projected inflation rate could increase poverty in Armenia, which already grew in 2020 due to the coronavirus pandemic. But he said that the impact of the rising consumer prices should be offset by robust economic growth recorded in the first five months of this year. The growth is translating into new jobs and higher wages, he told journalists.
Kerobian also pointed to the government’s decision last week to raise the national minimum wage by 10 percent, to 75,000 drams ($182). The measure will take effect in January 2023.
Government officials have said that pensions will also rise next year. But they have not yet specified the extent of the promised increase.
Inflation hit the double-digit rate last month despite a sharp appreciation of the Armenian currency, the dram, which began in mid-March amid an influx of thousands of Russians who left their country following the Russian invasion of Ukraine. The dram’s exchange rate has also been affected by a significant strengthening of the Russian ruble.
Armenia’s Central Bank has made clear that it will not cut interest rates or intervene in the domestic currency market to reverse the dram’s appreciation which is hitting hard some Armenian exporters. The bank’s governor, Martin Galstian, insisted last month that the stronger dram is somewhat easing external inflationary pressures on the Armenian economy.