Tag Archives: inflation

Armenia’s tumbling interest rate

FEB. 17 2017 (The Conway Bulletin) — >> How dramatic has these interest rates cuts been?

>> Very. Like a downhill skier racing to the bottom of the run, Armenia’s Central Bank have been determined and dogged. In mid-2015, the interest rate had been 10.5%. Now it’s at 6%, its lowest ever level. In November and December 2015, the Central Bank slashed rates by 1.75% but otherwise it has been a steady path, generally knocking off a quarter of a percentage every month or so.

>> But why has the Armenian Central Bank been in such a hurry to cut rates?

>> Basically, deflation has become the main driver of Armenian economic policy in the past couple of years. Price rises started to slow down in mid-2015, a sign of the tough economic times triggered by the recession in Russia. Within 12 months, prices had tipped into deflation. Earlier this month, the Central Bank said that although food prices had started rising again, non-food items were still dropping in price.

>> And what about going forward? Has there been any forward-looking guidance from the Armenian Central Bank?

>> A bit. The Central Bank has said that prices will remain soft in 2017 because the domestic economy is still limping along. It said non-food items, gas and electricity prices had all fallen in price. By cutting rates, it is trying to stoke economic activity. The risk is that a fall in interest rates will weaken the dram. It is now valued at 486/$1, its lowest since March 2016 and about 20% weaker than it was in mid-2014.

>> Is it a similar story in Georgia and Azerbaijan, Armenia’s neighbours?

>> Not exactly. In Georgia there has been some deflationary pressure on prices but not to the extremes seen by Armenia. Its Central Bank had also cut interest rates but it has now reversed this trend and actually put up rates last month. It also said that inflation would start rising this year. In Azerbaijan, as reported in The Conway Bulletin last week, prices are rising and fast. The major problem there has been the collapse in the currency. Azerbaijan is far more reliant on oil prices than Armenia or Georgia and has seen its currency halve in value over the past couple of years. This drop in the value of the currency has pushed up inflation.

>> What can Armenia do to stop deflation?

>> The deflation is slowly curbing itself. Food prices are rising and non-food prices are not falling as fast. Armenia’s economy closely follows Russia. The Russian economy is improving as oil prices rise, helping Armenia to recover too.

ENDS

(News report from Issue No. 317, published on Feb.17 2017)

Bread prices rise in Kazakhstan

FEB. 14 2017 (The Conway Bulletin) — An informal study of bread prices by the ranking.kz website showed that prices have risen by 8-9% in the past year. This is important because the survey acts as a balance on official inflation data which has said that price rises have been more gentle. Economists have been predicting a jump in prices, linked to the devaluation of the tenge.

ENDS

(News report from Issue No. 317, published on Feb.17 2017)

Food prices jump in Armenia

FEB. 6 2017 (The Conway Bulletin) — Price inflation in Armenia is increasingly diverging between food and non-food items, the presidential adviser to the National Statistics Agency, Gurgen Martirosyan, said. In January, he said, food prices were 7.4% higher than in December 2016. Non-food prices, though, fell 3.4% and services by fell 1.8%.

ENDS

(News report from Issue No. 316, published on Feb. 10 2017)

Inflation starts rising in Georgia

FEB. 3 2017 (The Conway Bulletin) — Inflation in Georgia has started to pick up, as the Central Bank predicted. In January, prices in Georgia were 2.9% higher than they were in December, the state’s statistics service said. Annualised inflation in January 2017 measured 3.9%. In January, the Georgian Central Bank raised interest rates because it said that inflation was rising.

ENDS

(News report from Issue No. 316, published on Feb. 10 2017)

Azerbaijan admits that prices are rising

FEB. 9 2017 (The Conway Bulletin) — Azerbaijan’s government has finally admitted that prices are rising across the country, pushed up by a sharp fall in the manat currency and a dire economic outlook, but that these rises are not going to hurt ordinary people.

In a press release aimed at dampening growing frustration with the government, deputy PM Ali Ahmedov said that the government was investing in schemes that should suppress prices.

“I do not think the current level of increase in prices will affect the level of poverty in Azerbaijan,” he said.

Although evidence on the streets of people’s frustration with price rises is muted, social media sites, and especially Facebook, are full of disgruntled posts. Facebook in particular has become an important medium for ordinary people to express their views relatively freely.

One Facebook user, Elnur, said that the government was not doing enough to prevent price rises and was supporting big business over small.

“The government is guilty of not preventing large holdings and companies that create monopolies in imports, impacting price increases,” he wrote.

Irada Bayramova, a school teacher who lives in Baku, described the price rises to the Conway Bulletin.

“I used to pay 2.40 manat for tea. Now the price of the same tea is 3.27 manat. Previously 1 kg of potatoes was 1.05 manat but now I need to pay 1.59 manat,” she said.

“Everything is too expensive and the prices do not fit salaries. We cannot buy products in the market. The government needs to help us as we are in a hard situation.”

Azerbaijan’s oil-backed economy has been hit particularly hard by the economic downturn.

ENDS

(News report from Issue No. 316, published on Feb. 10 2017)

Armenia’s inflationary data shows price drop

JAN. 13 2017 (The Conway Bulletin) — Inflation data from Armenia’s national statistics office showed prices dropped in 2016 by an average of 1.1%, media reported. The largest fall was in food prices which fell 3.3%. Service prices rose by 1.1%. Deflation has been stalking Armenia for sometime, indicating an economic slowdown.

ENDS

(News report from Issue No. 313, published on Jan. 20 2017)

Inflation slows in Kazakhstan

JAN. 4 2017 (The Conway Bulletin) — Annualised inflation in Kazakhstan slowed to 8.5% in 2016, down from 13.6% in 2015, the country’s statistics committee said. The slow- down will be a relief to the Central Bank as it will give it increased room to use its monetary policy levers to try and induce more economic activity. The government’s inflation target has been 6-8%.

ENDS

(News report from Issue No. 312, published on Jan. 13 2017)

House prices fall in Kazakhstan

JAN. 9 2017 (The Conway Bulletin) — The price of new housing in Kazakhstan, considered a key economic indicator, was 3.6% lower in December 2016 than 12 months earlier, media reported quoting the economy ministry. This is still slower than the fall in older houses which analysts said was down by up to 15% in 2016. Kazakhstan’s economy has been hit by a collapse in oil prices and the fall in the value of the tenge.

ENDS

(News report from Issue No. 312, published on Jan. 13 2017)

Tax pushes up inflation in Georgia

JAN. 3 2016 (The Conway Bulletin) — Georgia’s state statistics committee said that annualised inflation in Georgia measured 1.8% in December, a sharp increase from 0.2% measured in November. This increase was expected because of a rise in excise duty imposed on alcohol and cigarettes. Deflation has been stalking Georgia’s economy, a reflection of the tough economic times hitting the region.

ENDS

(News report from Issue No. 311, published on Jan. 6 2017)

Inflation falls in Kazakhstan

JAN. 4 2016 (The Conway Bulletin) — Kazakhstan’s statistics committee said that inflation had slowed to 8.5% in 2016 from 13.6% in 2015, suggesting, perhaps, that the economy is coming back under control after a turbulent period. Like the rest of the region, Kazakhstan’s economy has been hit by a fall in oil prices and a recession in Russia.

ENDS

(News report from Issue No. 311, published on Jan. 6 2017)