The society of Armenia was very surprised in the end of last week because the price of eggs before Easter did not go high.
People were afraid that the prices would go high drastically because they have such experience. People are still concerned of possible inflation.
The official statistics has published official report on prices in January-March, according to which prices have grown only by 0.1% compared to February, and during one year – by 2.2%. This information is not critical but people believe that the prices are kept at the same level artificially because there are elections coming up. It is not excluded that the prices may drastically grow following the elections.
For example, the president of the union of consumers Armen Poghosyan thinks so too. During a meeting with journalists last week he said that the prices of egg and food are dynamically connected with elections. “There is connection and this tendency exists before elections. It is not excluded that after elections there may be a new wave of growth of prices. The prices of petroleum, gas and water are not revised as they are waiting to change the prices after the elections,” said Armen Poghosyan.
It is difficult to guess what the connection is and what the impact of elections will be on prices, but f we look at the dynamics of statistics in the past years, we will see an interesting tendency.
Following the parliamentary election in 2007 the statistics reported not growth of prices but reduction. In June the consumer prices compared to May went down by 0.3%, and in July compared to June – by 3.2%, in August compared to July – by 1.5%. This means that during three months following the parliamentary elections the rate of inflation for all those three months was 5%, which is really a very high rate.
There was a different dynamics following the presidential election in 2008. The monthly inflation rates for every month compared to the previous month was 1.4% in March, 1.1% in April and 1.3% in May. In that case the total inflation rate for the following three months after the elections was 4%.
What conclusion can be made based on these rates? Are prices growing after elections or no? It is difficult to say that but the fact is that after parliamentary elections the prices went down and then started to grow again after the presidential election. In Armenia the presidential elections are thought to be more important than the others, thus the authorities will not spoil the pre-election environment by letting inflation grow. In consideration of the past experience, we may say that following the parliamentary elections the prices will not grow, and will start growing again after the presidential elections. For example, the price of gas will grow for sure.
Even though the authorities say that they are paying 180 dollars per cubic meter of gas bought from ArmRusGazArd company, but the real price they are paying is 210-220 dollars. According to our information, the Russian party has revised the prices during last year. Such information has even been reported by Haykakan Zhamanak newspaper. This fact can be proven even by the statistics of the import rates because the import section for gas has significantly changed. During the first half of 2011 Armenia imported 1094 million cubic meter gas, and the customs fee for that gas was 187 dollars. In the second half of the year Armenia imported 936 million cubic meter gas, and the customs fee of gas was 190 million dollar. Simple calculations show that in the second part of the year the price of 1000 cubic meter of gas grew from 187 to 203 dollars.
Now let’s go back to the question why the government does not want to inform the society about the fact that the prices of gas have grown. The answer is that in such situation it will be very difficult for them to explain why the ArmRusGazArd company has not filed an application for proposing prices growth. When the ARG company is accused in high prices, the officials of the company explain and say that they are doing a lot of expenses to deliver gas to final consumers. Now, when they pay 210-220 dollars for gas, they still sell it to large consumers for 243 dollars. If we take into account the above mentioned extra expenses, we will see that the ARG company is losing.
The important question is that why the ARG is not increasing the price of gas. The answer is that because elections are coming up. We don’t want to make any statements but all processes show that there is agreement between the government and ARG company. The logical answer is that they will wait till the end of the presidential elections. As soon as the parliamentary and presidential elections are finished, the monopolist of gas will apply to the commission on regulating public services to increase the price of gas. They will bring the fact that the Russian party has increased the price of gas as justification for increasing the prices offered by them. There may be people who believe that our assumptions are baseless, but let’s wait and see whether these processes hide anything like that as it happened to the 5th bloc of Hrazdan HES or Iran-Armenia gas pipeline.
As soon as the price of gas is increased, the prices of consumer products will increase as well. Energy resources and politics are closely connected. However, there will not be significant changes till February 2013. On the other hand, the government may do something not to let prices go up; for example, the government may subsidize the energy. However, we should not forget about the fact that any subsidizing is done on the account of consumers too.