CBA CONTINUES TO RAISE REFINANCING INTEREST RATES UNDER CONDITIONS OF GROWTH IN FOOD PRICES

Noyan Tapan

Se p 10, 2008

YEREVAN, SEPTEMBER 10, NOYAN TAPAN. Inflation made 6.6% in Armenia
in late 2007, while the average inflation made 4.4%, exceeding by
about one percentage point the permissible level of the envisaged
annual fluctuation, the Chairman of the Central Bank of Armenia
(CBA) Arthur Javadian stated at the RA National Assembly on September
9. According to him, the reason was the impact of a considerable rise
in food prices in international market. In particular, the growth in
prices of bread products, as well as butter and vegetable oil made
24% and 29.2% respectively, contributing to overall inflation by 3.6%
and 1.2%. 9.7% inflation was recorded with respect to domestic food
prices in 2007 due to the developments in international market. The
prices of the two other components of the consumer basket – nonfood
commodities and services grew by 2.5% and 3.2% respectively.

The inflation in international market affected the markets of other
countries as well: it made 19.5% in Azerbaijan, 12.1% in Belarus, 11%
in Georgia, 18.8% in Kazakhstan, 14.1% in Latvia, and 9.6% in Estonia.

9.6% inflation was recorded in Armenia in the first quarter of
2008 against the same quarter of 2007. The 12-month inflation in the
commodity groups of bread products and butter-vegetable oil made 33.3%
and 32.3% as of late March 2008, contributing by 5% and 1.5% to the
overall inflation. The growth in food prices in its turn affected
the inflation concerning non-food commodities and services.

A. Javadian said that in the first quarter of this year CBA continued
to tighten its monetary and credit policy by raising the refinancing
interest rates.