How the Changes in Electricity and Water Tariffs Will Affect Overall Inflation: Central Bank President

In 2021, food prices increased by about 12 percent, attributed to two main reasons: inflation from external markets and seasonal price rises for certain products. This was stated by Central Bank President Martin Galstyan at a press conference today, February 1.

“For example, inflation in Armenia has been 7.7 percent, while in the USA it has reached 7 percent. Since 1982, the USA has not experienced such inflation. Currently, inflation in Russia stands at 8.4 percent and is still on the rise. We have decreased from 9.6 percent to 7.7 percent. Georgia is experiencing double-digit inflation,” he noted.

Regarding the expectation of food inflation mirroring 2021's behavior, he stated, “We do not expect food prices to behave in the same manner this year according to our baseline scenario. We anticipate that food prices will rise at a slower pace.”

When asked about the impact on regulated prices, Galstyan said, “According to our estimates, we have already calculated the expected inflation from changes in water and electricity tariffs. Our forecasts suggest it will amount to 0.6 percent annually. There is a potential secondary effect regarding electricity. We estimate that the overall inflation concerning regulated prices will range from 1 to 1.5 percent annually. This means it will add to the annual inflation rate.”