EDB forecasts 1.8% inflation and further refinancing rate cut in 2024

YEREVAN, December 9. /ARKA/. The Eurasian Development Bank (EDB) forecasts a 1.8% year-on-year price growth in Armenia by the end of the current year.

"Inflation continues to remain below the target range set by the Central Bank of Armenia (3% ±1%), which could lead to another reduction in the refinancing rate at the upcoming meeting in December," the EDB weekly macro review states.

The study notes that the acceleration of 12-month inflation in Armenia to 1.4% in November, up from 0.6% a month earlier, is primarily due to price dynamics in the food sector. Food prices increased by 1.7% year-on-year in November, following a 0.5% year-on-year decline the previous month.

"In November, the growth in prices for services remained at 3.0% year-on-year. Disinflation in the non-food sector remained unchanged from the previous month at 2.1% year-on-year," the report says.

Inflation Figures and Forecasts

The 2024 state budget of Armenia projects inflation at 4% (±1.5%). In November, 12-month inflation was 1.4%. According to the Central Bank’s monetary policy report for the third quarter of this year, inflation in Armenia is expected to be between 2.1% and 2% by the end of 2024. The forecast for 2025 is between 4% and 3.2%, for 2026 it’s 4.2% to 3.8%, and for 2027 it’s 4%.

The World Bank expects inflation in Armenia to reach 3% in 2024, 3.5% in 2025, and 4% in 2026. The IMF predicts a 3.1% price increase in Armenia in 2024 and 3.7% in 2025. According to ADB forecasts, inflation will be 0.8% in 2024, and will accelerate to 2.5% in 2025. The EDB expects inflation to reach 1.8% by the end of the current year and 3.1% by the end of 2025.