Inflation up
4.5 percent

Driven by commodity

prices, higher euro

The annual inflation proxy rate increased to 4.48 percent in 2017 from -0.82 percent in the previous year, according to the Central Administration of Statistics (CAS).

The Consumer Price Index (CPI) rose five percent in December compared with the same month in 2016. The prices of all categories of goods and services that compose the CPI increased over the same period.

The Institute of International Finance (IIF) said in its ‘Economic Views’ report released in December: “Inflationary pressures have increased in recent months due to the increase in global commodity prices and the depreciation of the dollar vis-à-vis the euro, leading to significant increase in import prices.” The hike in public wages is also contributing to higher prices, according to the IIF.

The prices of clothing and footwear recorded the largest annual increase jumping by 17.4 percent in December 2017 compared with December 2016. Middle-range and high-end clothing is mainly imported from Europe.

The cost of water, electricity, gas and other fuels, which have a weight of 11.8 percent in the calculation of the CPI, went up 8.9 percent. The increase in the cost of this category was driven by higher oil prices, according to Statistician and Economist Robert Kasparian.

Prices in the food and non-alcoholic beverages category, which has the largest weight of 20 percent, increased by 3.7 percent.

Old rent rose 7.1 percent as property-owners were to increase their rents following the new law, Kasparian said.

Alcoholic beverages, and tobacco, rose 7.6 percent.

The category that had witnessed the least increase in prices was communication, which rose 0.82 percent in December 2017 compared with the same month of the previous year.

The International Monetary Fund (IMF) and the World Bank expect an annual inflation rate of 2.5 percent in 2018, while the IIF anticipates an inflation of 4.6 percent.