EDB expects price growth to accelerate in Armenia

YEREVAN, January 20. /ARKA/. The Eurasian Development Bank (EDB) forecasts a further acceleration in price growth in the coming months, with inflation expected to align closely with the target of the Central Bank of Armenia (3% ±1%). This is stated in the EDB’s weekly macroeconomic review.

"Under these conditions, the likelihood of completing the current cycle of refinancing rate reductions in the first quarter of 2025 is increasing," the report notes.

EDB analysts point out that inflation in Armenia reached 1.5% year-on-year in December, up from 1.4% year-on-year the previous month.

"Food prices continued to rise: 2.0% year-on-year in December, up from 1.7% year-on-year the previous month. In December, the growth in service prices remained at 2.5% year-on-year (down from 3% year-on-year the previous month). Disinflation in the non-food segment slowed, registering 1.8% year-on-year, compared to 2.1% year-on-year a month earlier," the macro review states.

The cycle of reducing the refinancing rate in Armenia has been ongoing since June 2023, with the Central Bank lowering this rate 13 times in a row, from 10.5% to the current 7%.

Inflation Figures and Forecasts

The 2025 state budget of Armenia projects inflation at 3% (±1%). In November, the 12-month inflation rate stood at 1.4%. According to the Central Bank's monetary policy report for the fourth quarter of last year, inflation in Armenia is expected to range from 3.9% to 3.2% by the end of 2025. The forecast for 2026 is 4.2%-3.8%, while for 2027, it is 4%.

The World Bank expects inflation in Armenia to be 3.5% in 2025 and 4% in 2026. The IMF forecasts a 3.7% increase in prices in 2025. The ADB expects inflation to rise to 2.5% in 2025. The EDB anticipates inflation in Armenia to reach 3.1% by the end of 2025.