Hayots Ashkharh , Armenia
Dec 8 2007

YEREVAN – ONE OF THE MOST EXPENSIVE TOWNS

In comparison with many other countries, the official rate of
price growth in Armenia is much lower; it is even twice lower than
the rate recorded in a number of CIS countries. On the other hand,
however, there are a great number of products in Armenia which are
much more expensive compared to countries with higher rates of price
growth. It is not accidental that Yerevan in this regard is
considered one of the most expensive towns on the CIS territory, and
the prices on some food products are even higher than, for instance,
in Moscow.
The price topping pressures on the commodity markets made the
Central Bank increase the interest rate by 0.5 per cent in December.
Increasing the money exchange rate, the CBA had a goal to influence
the price growth in some way. Especially considering that the price
growth already exceeds the target index as a result of the increase
of the prices on the commodity market.
As of November 2007, the 12-month price growth made up 6.8 per
cent, instead of the envisaged rate of 5.5 per cent. The price growth
rate is expected to further increase in December, in connection with
increasing the expenses on the eve of the holidays and preserving the
influence of the international tendencies. So, this year is supposed
to come to an end with a price growth of 7.8-8 per cent, which
exceeds the target index by 2-.2.5 per cent.
Even though, a slowdown of price growth was observed on the
Armenian food market in November, the wave of the increased prices
was mainly preserved. According to the observations of the National
Statistic Service, the prices on flour and bread, as well as butter
and vegetable oil continued to increase.
Despite the fact that the price on flour did not rise in November,
there was a certain increase on the prices on bread. While the price
of first quality bread grew by 2 Drams, top quality bread recorded a
price growth of 4 Drams. Their prices fluctuate within the limits of
318 and 371 Drams respectively.
In comparison with the same period of last year, prices on bread
recorded an increase of 85 Drams. In terms of such paces of price
increase, Armenia falls behind only Astana and Dushanbe on the CIS
territory, as the prices on bread in these towns have increased by
150 and 140 Drams respectively.
The price on bread has increased by 22 Drams in Moscow, while in
Minsk and Bishkek it has increased by 3-4 Drams. It is noteworthy
that in comparison with last year the price on flour increased by 136
Drams in Bishkek. This means that the state has applied certain
mechanisms of subsidy, with the purpose of preventing any increase on
the price of bread in that connection.
In terms of the high prices on this particular food product,
Astana is the only town on the CIS territory from which Armenia falls
behind. In all the rest of the CIS countries, bread is sold at
cheaper prices in comparison with Yerevan.
In November, the prices on vegetable oil increased a little in
Yerevan, while the prices on butter decreased. Despite that, the
price growth of products is extremely high.
The price on butter in Yerevan increased by 828 Drams; none of the
CIS countries has ever recorded such a high price growth. In Moscow,
where butter is sold at the highest price, there was a increase of
519 Drams for this product. Whereas in Dushanbe, for instance, the
prices have decreased. Within the past year, butter in Baku has
become expensive by 192 Drams. In terms of such high price records
for this particular food product, Yerevan falls behind from only
Moscow, the average price of butter being 2442 Drams per kilogram.

VASAK TARPOSHYAN