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Inflation in Armenia is conditioned by the supply, and in the recent period also by the increase in prices for seasonal products. In particular, vegetable prices grew by around 66% in August compared to the same month of last year, Chairman of Armenia’s Central Bank Martin Galstyan told a news conference on Tuesday.

According to him, two key factors, including demand, affect inflation rates. In early 2021, private consumption increased by 5.9%, whereas gross capital formation decreased by 6%, thus, demand is outstripping production capacity, he said.

Martin Galstyan noted that a rise in prices for domestic services has also been recorded in Armenia.

“We are trying to convey to the public the message that in 2022 we will return to our inflation target, therefore, at the moment we are pursuing the goal of anchoring inflation expectations,” the Central Bank head said.

According to him, the influence of external factors on the national inflation rates is expected to maintain.

Asked to what extent the closure of the Goris-Kapan road will affect the economy, Martin Galstyan replied: “We are considering the baseline scenario, as well as several alternative scenarios around it. In the baseline scenario there are certain measured risks, but we believe that these risks are not significant in terms of disruption of the economic process or threats to the economic activity.”

In his words, the Central Bank is elaborating risk scenarios, which include the Goris-Kapan road closure, but such a situation is not reflected in the baseline scenario.

Martin Galstyan also said that the Central Bank forecasts a 5.4% growth for 2021.