CPI. English and Armenian

The Real Causes of Inflation and Perspectives for Overcoming Them

 Inflation cannot be ranked among possible threats to the economy. Under prevailing conditions, where currency is no longer backed by gold or other reserves and, in a certain sense, representing a state obligation, inflation could even be considered to spur the dynamic growth of the national economy within a range of 5-6 annual percentage points.

Additionally, year-end increases in the consumption of goods and in production costs could well be considered a natural phenomenon requiring additional monetary resources. Realizing that available monetary resources could be insufficient to meet relatively higher household demands in the eve of a New Year, commercial enterprises in developed countries ordinarily offer consumers the benefit of considerable price discounts, augmenting their purchasing power and stretching their limited resources. Conversely, in Armenia, prices move in the opposite direction ¾ they increase ¾ primarily being driven by sellers’ confidence in Armenian consumers’ disposition with respect to purchasing their goods under any circumstance, even at the cost of obtaining them on credit.

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