Global food prices have declined, what to expect in Armenia – AlphaEconomics #73

The global food prices declined by 1.3 percent in August 2024 compared to August of the previous year, with the FAO Food Price Index standing at 120.7 points. One of the main reasons for the fall in global food prices is the policy of the countries maintaining expensive money. The index reached its peak in 2022 (144 points).

As a predominantly importing country, Armenia could not remain unaffected by changes in world prices. It is no coincidence that at the high level of the FAO index, food prices were also high in our country.

Of course, it would be wrong for us to determine the prices exclusively with global inflationary pressures. There are many factors, including pursued policy. In the case of food, the factors include seasonality, yield, domestic demand, etc.

In terms of policy, of course, the biggest tool aimed at fighting inflation is the Central Bank’s refinancing rate. There is an objective discussion that the rate of price change and the rate of reduction of the basic interest rate by the Central Bank today are not equivalent. The Board of the Central Bank explains this by both internal and external uncertainties, which in itself is a circumstance that deserves attention.