Yerevan/Mediamax/. The plan index of 12 months’ inflation by the end of the first half is forecast by the Central Bank (CB) of Armenia at the level of 9.5%.

Mediamax reports referring the CB’s monetary-credit policy program as of the I quarter, 2011, that according to CB forecasts, the 12 months’ inflation in the first half of 2011 will be preserved at a high level, and the fact will be conditioned by the offer shocks, coming from the end of 2010, including the unprecedented high price for agricultural production and increase of world prices for main foodstuffs and raw materials.

“Starting from the third quarter, in conditions of fading of the above-mentioned shocks, the inflation speeds will reduce, and by the end of the year the plan index is forecast at the level of 5.3%. Besides, given uncertainty, the likelihood of inflation deviation from the forecast level towards increase is high. Given 41% likelihood, inflation by the end of the year will make 5.5-7.5%”, the program notes.

The program reads that the likelihood of inflation forecasts’ deviation is conditioned by the possible formation of higher international prices for foodstuffs and raw materials in conditions of a more dynamic revival of world economy, internal inflationary pressures (faster revival of internal demand and legislation change, related to the excise tax and transition to the general order of cigarettes’ taxation); as well as developments in agriculture (as opposed to other circumstances, here risks of inflationary pressures’ reduction prevail).

“Taking into account the above-mentioned facts, in order to make the inflation closer to the target index (4%), it is necessary to toughen monetary-credit policy, simultaneously continuing measures on dedollarization”, CB program reads.

As a result of dedollarization measures, progressive growth of AMD mass correlation against currency mass is expected in 2011. Growth of currency mass and AMD mass in 2011 is expected at the level of 16% and 22.2% respectively; and the growth of currency base this year is planned at the level of 12.3%.

“Reduction in economy dedollarization will lead to increase of AMD deposits’ growth rates as compared to USD ones, as well as to 13% growth of AMD cash in circulation”, CB notes.

The speeds of economy crediting growth in 2011, according to the assessments of CB, will be more moderate, as compared to 2010 (18% against 27% of economy crediting growth in 2010), which is mainly conditioned by the planned toughening of monetary-credit policy.