Yesterday the National Statistics Service (NSS) publicized the preliminary index of the inflation of January-April, 2007. In April, compared to March, prices increased by 0.1%. Compared to December of last year, prices increased by 2.1%. Compared to the last 6 years, this is the lowest index.
We leave it up to the readers to believe or not believe the indexes of the NSS. However, this time let’s speak about something else. If we pay close attention to other indexes, then serious contradictions come up. Let’s just mention that in the first quarter of 2007, our country registered 11% economic growth, instead of the planned 9%. Moreover, the government decided to re-examine the state budget plans. The inseparable escort of economic growth is inflation. In this case, why does the economic growth exceed the planned index and the inflation doesn’t? Another question arises because of the interconnection of inflation and AMD rate. The Central Bank of RA has always made the AMD rate and inflation controversial. This means that preventing the revaluation of the AMD will cause inflation. The RA economy doesn’t have a choice – either inflation or AMD revaluation. However, April is interesting, because during this period the AMD was devalued. In mid-April, the USD reached 370 AMD, from 355. However, during that same period, prices rose by only 0.1%. What about the contradiction? The reason of AMD devaluation is perhaps a separate topic to discuss? In the past they were saying that the USD is devalued because of the enormous amount of USD transfers from abroad. Does this mean that now people have started to transfer less USD from abroad? This version is not that logical. A more logical reason is the coming parliamentary election, and we know that all elections imply certain turbulence and uncertainty. How about the fact that recently the AMD started to revalue again, and the USD rate was lowered to 356. Maybe from the beginning of the campaign the political parties already agreed about the distribution of votes. No one knows for sure. It is perhaps possible to quote economist Edward Aghajanov by saying that the “guys need money”. It means when AMD is revalued, the guys need money, and when devalued, they need more money. It’s understandable that everybody is busy with the elections. But we hope that the CB will find some time to try to answer this question. Why did AMD devalue at the end of March and revalue in mid-April? If it’s somehow connected with the demand-supply of the market, we’d ask them to comment on the behavior of the market.