Phenomenon of high prices: Head of the Central Bank of Armenia explained why prices for goods and services are high in Armenia
YEREVAN, September 26. /ARKA/. Martin Galstyan, Chairman of the Central Bank of Armenia, answered a question on the republic's Public Television about why all goods and services are expensive in Armenia.
"There are several phenomena, especially in terms of goods. We are a closed country; in terms of transportation, we pay more than our neighbors. This is a negative aspect," he said.
Responding to a question about why food products are expensive in Armenia, particularly in restaurants that prepare food from local produce, Galstyan said that external interference is, one way or another, present.
"If we look at price developments after 2022, when there was an influx of foreigners into the Armenian market, consumption increased significantly. And we noticed that prices for non-exported services—fixed prices—have increased," he explained.
According to the head of the Central Bank, the main factor determining commodity prices is the phenomenon of geographic location, as well as the country's small size.
In this regard, he explained that while, for example, when producing goods in the US or Russia, it is possible to reach a production level where fixed costs are spread over a larger quantity, in Armenia the market is limited.
This is why, according to him, all governments are focused on developing an export-oriented economic policy—creating competitive goods that can be exported.
Galstyan pointed out another phenomenon in Armenia in the context of high prices.
"In Armenia, a small economy, there is also seasonality, including in terms of visitors and representatives of the Diaspora arriving in the country," he explained.
Responding to the remark that the factors he cited are also observed in other countries where prices are lower, the head of the regulator said that supply factors are the most important in determining prices.
"At one time, we had an uncompetitive situation in some markets. Currently, we are in a better competitive position, but prices are higher. This suggests the presence of natural phenomena that are reflected in price levels," Galstyan said.
According to Armstat, 12-month inflation in the Armenian consumer market in August of this year was 3.6%, down 0.2% from July.
