168: The risks are increasing. What will the pensioner get from the increase in pensions?

While the government rushes to increase pensions by 10,000 drams 3 months before the elections in order to bribe pensioners, inflation threatens to neutralize the effect of the increase in pensions. Recently, inflation in Armenia has become noticeably active. Due to a number of regional and internal factors, the potential risks of price increases have also increased.

For now, the Central Bank refrains from reacting to this situation and revising the refinancing rate. But if this continues, it will be impossible to avoid them.

Inflation activation was noticed in Armenia already at the beginning of the year. Twelve-month inflation rose to 3.8 percent in January from 3.3 percent last year. In February, the pace of price increases continued to accelerate, and compared to the same period of the previous year, 4.3 percent inflation was recorded.

The acceleration of inflation was dictated especially by food markets, where the rates of price increases are much higher. If at the end of last year, food inflation was 4.3 percent, in January of this year it became 5.9 percent, and in February it reached 6.5 percent.

Even if we do not take into account the fact that the prices of many types of food have risen at double-digit rates, this is already a serious alarm for consumer markets and consumers. We are talking about those citizens whose incomes are not expected to increase. In the conditions of activation of inflation and expansion of price increases, they have to spend more, if they have such an opportunity, or reduce consumer demand.

In both cases, it will be to the detriment of these groups of citizens, whose worries the political authorities are not ready to raise even the promised minimum wage.

In the past, pensioners were told to raise their pensions, no matter what they do, they don’t know how to spend the money, and now they say that raising the minimum wage is pointless, it won’t do anything. The question arises, if so, why did they include the “meaningless” promise of increasing the minimum wage in the government’s priorities?

It is clear that the purpose of such announcements is to avoid raising the minimum wage, as they once avoided raising pensions. Only after they saw that they were facing the fact of losing the votes of the pensioners, without grounds and justifications, they decided to hastily increase the pensions, creating problems for both this and future years of budgetary fiscal stability. But since the question of losing the power is raised, and keeping the power is the supreme goal of the CP members, they don’t care what dangers may arise in the future. That is why they hastened to increase pensions from April 1, simultaneously increasing the expected inflationary risks from that sector.

The increase in pensions will stimulate inflation, and the question is whether it will benefit or harm the pensioners more.

We are already seeing active inflationary manifestations in the market of many products.

Meat products have managed to increase in price by 8.2 percent in the last 1 year. Double-digit inflation has been registered, both in the case of beef, pork and lamb. According to official data, the price of beef increased by 12.5 percent, pork by 11.7 percent, and lamb by 13.3 percent. Inflation of fish products was 9.6 percent, dairy products exceeded 10 percent.

The price of eggs, in particular, has risen sharply, more than 19 percent compared to the previous year.

The inflation of oils and fats was 6.2 percent, the price of wheat rose by 6.4 percent, buckwheat by 10.1 percent, flour by 6.2 percent, and pasta by 8.6 percent.

Inflation of sweets, particularly chocolate, reached 10.6 percent in one year. Coffee has become more expensive by 8.7 percent, cocoa by more than 36 percent.

The inflation of fruits and many other products, as well as services, is also active.

And the consequences of all these price increases are borne by the consumers. Many, having no other options, are forced to cut costs, and the authorities are proud that they have improved people’s lives. They have improved their lives and increased their incomes at the expense of the state so much that they don’t even notice the price increases, they think that the life of an ordinary citizen has also improved.

The inflationary activity that we see recently threatens the pockets of many thousands of citizens who were barely able to support their own existence before. But that is not all. Not only inflation has intensified in Armenia, but also inflationary risks have increased, dictated especially by recent regional developments, in particular, by the Israeli-American attack on Iran. After that attack, logistical problems worsened. Cargo transportation through Iran has been mostly stopped or reduced. Carrying out cargo transportation by other roads is more expensive and time-consuming, which affects the prices of transported cargo.

It is known that Iran has already announced to completely stop the export of food and agricultural products from the country. Armenia is one of the consumption markets of some Iranian agricultural products. Moreover, they have not only consumer but also economic significance for Armenia. The production of dairy products, which is largely based on Iranian raw materials, is seriously dependent on Iran.

A number of other agricultural products, fruits and vegetables are also imported from Iran to Armenia, which are much more affordable. Stopping their import increases inflationary pressures and creates real risks of price increases in the domestic market.

Due to the regional situation, the inflationary risks coming to Armenia from other countries have also increased. Their effects may not be so visible for now, but the longer this regional instability continues, let alone military conflicts, the more the transmitted dangers will increase.

HAKOB KOCHARYAN

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