Russian restrictions may slow inflation in Armenia, but no Central Bank rate cut expected – former Finance Minister
31.07.2026,
14:29
Restrictions on Armenian goods exports to Russia may put downward pressure on prices within Armenia, but this will not be enough to force the Central Bank to lower the interest rate.
YEREVAN, July 31. /ARKA/. Restrictions on Armenian goods exports to Russia may put downward pressure on prices within Armenia, but this will not be enough to force the Central Bank to lower the interest rate. This was stated by former Finance Minister Vardan Aramyan in an exclusive interview with ARKA news agency.
According to him, if some agricultural products intended for export remain on the domestic market due to Russian restrictions, increased supply could lead to lower prices for certain product groups. The extent of this effect will depend on how quickly Armenian exporters can redirect supplies to other markets or find alternative routes.
"This is difficult to do in the short term, so some downward pressure on prices will likely arise," Aramyan said.
However, he noted that this factor alone will not be sufficient to change the monetary policy stance. In June 2026, 12-month inflation in Armenia stood at 5.1%, remaining above the Central Bank's target. Inflation in education services reached 8.3%, and in healthcare, 3.6%.
Additional risks include a possible revision of the price of Russian gas, geopolitical tensions in the Middle East, the Russia-Ukraine conflict, and relations between the US and China. These factors could lead to higher energy prices and increase the cost of goods and services.
"The potential deflationary effect of Russian restrictions will likely only partially curb inflation, but is unlikely to be sufficient grounds for the Central Bank to lower interest rates," Aramyan said.
According to him, if external factors increase inflation and inflation expectations, Fitch's projected increase in the Central Bank rate by 0.25 percentage points to 6.75% could be a justified step to return inflation to the target level in the medium term.
Restrictions on the supply of Armenian goods to Russia
Since the end of May, Russia has been gradually introducing restrictions on the supply of certain products from Armenia, citing violations of phytosanitary requirements.
The restrictions affected flowers, mineral water, certain types of alcoholic beverages, vegetables, fruits, berries, grapes, potatoes, and dried fruits. Later, restrictions were extended to live fish and fish products, and, as of July 27, to dairy products.
The restrictions also include a ban on the transit of products of Armenian origin through Russia to other EAEU countries.
According to him, if some agricultural products intended for export remain on the domestic market due to Russian restrictions, increased supply could lead to lower prices for certain product groups. The extent of this effect will depend on how quickly Armenian exporters can redirect supplies to other markets or find alternative routes.
"This is difficult to do in the short term, so some downward pressure on prices will likely arise," Aramyan said.
However, he noted that this factor alone will not be sufficient to change the monetary policy stance. In June 2026, 12-month inflation in Armenia stood at 5.1%, remaining above the Central Bank's target. Inflation in education services reached 8.3%, and in healthcare, 3.6%.
Additional risks include a possible revision of the price of Russian gas, geopolitical tensions in the Middle East, the Russia-Ukraine conflict, and relations between the US and China. These factors could lead to higher energy prices and increase the cost of goods and services.
"The potential deflationary effect of Russian restrictions will likely only partially curb inflation, but is unlikely to be sufficient grounds for the Central Bank to lower interest rates," Aramyan said.
According to him, if external factors increase inflation and inflation expectations, Fitch's projected increase in the Central Bank rate by 0.25 percentage points to 6.75% could be a justified step to return inflation to the target level in the medium term.
Restrictions on the supply of Armenian goods to Russia
Since the end of May, Russia has been gradually introducing restrictions on the supply of certain products from Armenia, citing violations of phytosanitary requirements.
The restrictions affected flowers, mineral water, certain types of alcoholic beverages, vegetables, fruits, berries, grapes, potatoes, and dried fruits. Later, restrictions were extended to live fish and fish products, and, as of July 27, to dairy products.
The restrictions also include a ban on the transit of products of Armenian origin through Russia to other EAEU countries.
