What Has Become More Expensive and By How Much: Inflation Hits a Reverse Record in Armenia

The Armenian economy has recorded yet another reverse record. The Statistical Committee has documented that inflation continued from January to October 2021, reaching 6.9 percent. Inflation has been recorded not only compared to October of the previous year (9.1 percent) but also in October of this year compared to September (0.7 percent). It is notable that we haven't seen such inflation since 2013.

The ongoing high inflation is particularly concerning amid declining income levels and economic activity. In October 2021, compared to the previous year's October, food prices rose by more than 16 percent, clothing and footwear by 11.7 percent, transportation by 8.4 percent, and healthcare by 4.7 percent.

The significant increase in food prices has largely been influenced by the rising costs of vegetables. In particular, vegetable prices in October 2021 increased by 69.3 percent compared to the same period last year, and by 5.2 percent compared to September 2021. Meanwhile, prices for dairy products, cheese, and eggs increased by 11.7 percent in October 2021 compared to October 2020, and by 2.6 percent compared to September 2021. The price of eggs saw a rise of 28.2 percent year-on-year, and by 4.8 percent compared to September 2021. Cheese prices increased by 8.8 percent year-on-year, and by 2.5 percent compared to September 2021.

In the bakery and grain product category, prices increased by 10.4 percent in October 2021 compared to October 2020, and by 1.0 percent compared to September. The prices of bread, cereals, and flour increased by 11.0 percent, 17.3 percent, and 7.2 percent year-on-year, respectively, and by 1.0 percent, 1.2 percent, and 1.5 percent compared to September 2021. In October, the price of widely consumed sugar rose not only compared to the previous year but also compared to September, indicating unhealthy competition.

Meat prices increased by 7.6 percent in October 2021, while fats and oils surged by 23.6 percent. This significant increase in food prices is attributed not only to prices in the international market but also to a 1.5 percent decline in our agricultural sector. This means that despite the government's support programs for agriculture, this sector is experiencing a downturn, leading to income losses for farmers this year and next due to lack of marketable produce.

Fuel prices continue to rise as well; in particular, in October 2021, the prices of gasoline and diesel increased by 1.2 percent compared to September. In October 2021, compared to October 2020, gasoline and diesel fuel prices rose by 44.1 percent and 43.2 percent, respectively, while compared to December 2020, they increased by 37.8 percent and 44.3 percent, which in turn has significantly impacted economic activity.