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Standard&Poor’s forecasts inflation in Armenia at 2.5% in 2023

YEREVAN, August 28. /ARKA/. The S&P Global Ratings expects inflation in Armenia to average 2.5% in 2023, which is below the Central bank’s target

It recalls that inflation peaked at approximately 10% in mid-2022 but has since transitioned into deflation, decreasing to -0.5% in June.

Among other factors, the decrease can be attributed to base effects, the appreciation of the dram, and the Central Bank’s tight monetary policy stance, according to the agency.

It says that from 2024, robust consumer demand fueled by tourist arrivals and a tight labor market may cause inflation to rise. However, we anticipate these risks will be contained by the CBA’s restrictive monetary policy stance and the lagged impact of the dram’s appreciation on prices.

‘Therefore, we project inflation to average 2.5% this year, below the CBA’s inflation target (of 4%). Our inflation outlook leads us to expect the CBA will continue to gradually reduce its benchmark policy rate.’

Armenian government’ inflation projection for 2023 is 4% (±1.5%). Deflation was recorded in the country in June and July: 0.5% in June and 0.1% in July. According to the Central Bank’s June forecast, 12-month inflation will be slightly below the 4% target. -0-

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