Wednesday, December 27 2023 18:38

ArmInfo. Average y-o-y official inflation in Armenia will decrease to 2% in 2023, from 8.6% in 2022, but will then increase to 2.6% in 2024 and 3.5% in 2025. This is noted in the Central Bank's Monetary Policy Program (MPP) for Q4 2023, published at the end of December, where GDP growth expectations for 2023 indicate a less noticeable slowdown in rates to 8.3% (from 12.6% in 2022) and further to 6.1% in 2024 and 5.7% in 2025.

At the same time, the basic average y-o-y inflation calculated by the Central Bank (with the deduction of seasonal variable goods and administratively regulated services) is projected to decrease in both 2023 and 2024 to 2.7% and 1.8%, respectively (from 8.9% in 2022) , followed by an increase to 3.2% in 2025.

Moreover, the abovementioned inflation forecast covers January-December of the reporting year compared to the same period of the previous year., according to the new forecast of the Central Bank of the Republic of Armenia, official inflation will drop to the zero threshold (from the actual 8.3% for 2022) in 2023 alone (December to December 2022),  after which there will be an increase to 3.1% in 2024, which will continue in 2025- to 3.8%, thereby coming very close to the targeted 4%.

According to the FAO index, the new forecast report of the Central Bank indicates a decrease to 124.1 points in 2023, after asharp increase from 98.1% to 143.5% in 2020-2022. The decline of this indicator will continue in 2024, up to 121.5 points, but already in 2025 there will be an increase to 125.7.

In the same forecast report, the Central Bank of the Republic of Armenia provides 2023-2025expectations for inflation in the USA, Eurozone and Russia, as well as for international prices for oil and copper. Thus, average y-o-y inflation in the United States will decrease to 4.1% in 2023 (from 7.7% in 2022), then to 2.7% in 2024 and to 2.5% in 2025. In the Eurozone, inflation will decrease in 2023 from 8% to 5.6%, then to 2.9% in 2024 and to 2.3% in 2025. In Russia, inflation will decrease in 2023 from 12.9% to 5.9%, then rise to 7.6% in 2024 and then decrease again to 4.8% in 2025. At the same time, the same report provides forecasts for economic development in the United States, the Eurozone and Russia. Thus, US economic growth will accelerate in 2023 to 2.5% (from 2% in 2022), then slow down to 1.3% in 2024 and then accelerate slightly to 1.8% in 2025. In the Eurozone, economic growth will slow down to a stagnant 0.5% in 2023 (from 3.3% in 2022), with a further decline of 0.4% in 2024 and a return to the previous 0.5% growth in 2025. Russia's GDP will grow by 3.2% in 2023 (from a 1.9% decline in 2022), after which the pace will slow down to 1% in 2024, followed by a 0.4% decline in 2025.

The oil price, after rising to $99.5 per barrel in 2022, will drop to $82.1 in 2023 and to $80.1 in 2024, followed by a slight increase to $81.1 in 2025. The price of copper, after decreasing in 2022 to $8956 per ton in 2024, It will continue to decrease to $8,458.5 in 2023 and to $8136.3 in 2024, but there will be an increase to $8319.1 in 2025.

According to statistical data, for 2022 (December to December 2021), official inflation in the consumer market of Armenia amounted to 8.3% (against inflationary 7.7% in 2021).  The core y-o-y inflation calculated by the Central Bank in the same period amounted to 9.5% (versus inflationary 7.3% in 2021).  Moreover, such an increase in official inflation in 2022 came from a rise in the price of food products by 9.9%, non-food - by 7.2% and an increase in tariffs for services by 7.1%. At the same time, the average y-o-y inflation reached 8.6% (January-December 2022 versus January-December 2021) due to a rise in prices for food products by 12.5%, non-food products - by 7% and an increase in tariffs for services by 5.2%.

According to the Statistics Committee of the Republic of Armenia and the Central Bank of the Republic of Armenia, in November 2023, compared to November 2022, deflation at 0.5%, and core deflation at 0.2% was recorded, against respectively y-o-y inflation rates of 8.8% (official) and 9.9 % (base) in November 2022.

Moreover, food products showed a y-o-y decline in price by 3.1%in November, while non- food products and services increased in price by 0.2% and 2.9%, respectively, which looks much better than last year's increase in food prices by 10. 9%, non-food products - by 7.7% and services - by 7.1%. And in January-November 2023, compared to the same period in 2022, inflation at 2.2% was recorded (versus 8.7% a year earlier), provoked to a large extent by the continuing rise in prices for services - by 4.6% (versus 5% a year earlier) and in slower growth in prices for food and non-food products - by 0.8% and 1.8% (from 12.7% and 7% a year earlier).