The government's inflation target of 9.1% for 1998, which seemed very ambitious earlier in the year (given first-quarter year-on-year inflation of over 20%) looks set to be exceeded after month-on-month deflation in April-September, which averaged 2.3%. Year-on-year inflation stood at - 2.1% in September. This deflation was mainly the result of high agricultural output, which led to a significant decrease in agricultural prices on the domestic market. Tighter monetary policies since the second half of 1997 also helped. In the first eight months of this year prices of consumer goods decreased by 3.7% year on year, prices of non-consumer goods remained stable, while prices of services increased by 0.2%. The high agricultural output, a stable dram and low import prices have all contributed to this deflation.
Consumer prices (% change) Month on month Year on year 1997 Jan 3.1 5.1 Feb 1.6 3.2 Mar 0.8 3.8 Apr 1.6 5.9 May 3.3 9.3 Jun 3.9 15.2 Jul -0.4 18.6 Aug -1.0 17.1 Sep 3.4 22.4 Oct 0.1 22.7 Nov 1.7 21.9 Dec 1.9 21.8 1998 Jan 4.1 23.0 Feb 3.5 25.3 Mar 0.3 24.6 Apr -1.8 20.5 May -1.9 14.4 Jun -3.1 6.6 Jul -4.3 2.5 Aug -2.5 1.4 Sep -0.1 -2.1 Source: Central Bank of Armenia.
Download this file
--and the Treasury-bill market suffers
Since the Russian crisis, supply on the Armenian Treasury-bill market has exceeded demand despite increased yields. In September four issues of nine-month T-bills and one issue of one-year T-bills were cancelled because of insufficient demand. Issues of shorter maturity--six months, three months and one month--have been taken up, but with greatly increased yields. Yields on three-month T-bills rose to 48.11% at the end of September, up from 42% on July 21st.