Armenia Diesel Up 28% as EDB Holds 4.4% Inflation Forecast

The Eurasian Development Bank (EDB) expects Armenia's annual inflation to end 2026 at 4.4%, above the central bank's 3% target, according to its weekly macroeconomic review reported by ARKA on 12 October 2026. The bank has held that forecast since at least August, when NEWS.am reported it on 11 August 2026. Fuel is the sharpest pressure point: gasoline prices in September were 11.4% higher than a year earlier and diesel 28% higher, according to Statistical Committee (Armstat) data reported by ARKA on 12 October.

Headline consumer inflation eased to 4.3% in September from 4.4% in August, with prices up 0.2% on the month, Armstat data published on 5 October showed. Over January to September, prices averaged 4.5% higher than a year earlier. The mix of slowing headline inflation and rising fuel costs complicates the outlook for the Central Bank of Armenia, which raised its policy rate on 15 September for the first time since December 2022, according to the EDB.

Where prices are rising

Food and non-alcoholic beverage prices rose 6.2% year on year, although the EDB noted that food inflation slowed from 6.4% in August as some agricultural prices fell. Alcohol and tobacco rose 7.5%, restaurants and hotels 5.4% and clothing and footwear 4.6%. Service tariffs rose 2.9%, after 2.8% in August. Transport prices in the consumer basket were up 2.8% on the year and down 0.5% on the month.

Fuel costs

Diesel inflation accelerated from 25% in August, while gasoline eased slightly from 11.7%, according to Armstat figures reported by ARKA in September. Central Bank Governor Martin Galstyan said on 15 September that gasoline makes up about 5% of the consumer basket and that pump prices had reached 586 to 600 drams per litre. He said a significant return of world oil prices to earlier levels should not be expected soon, given the situation in the Middle East. Central bank data cited by ARKA showed tanker traffic through the Strait of Hormuz falling to practically zero since March 2026, with Brent crude again approaching $100 a barrel by September.

On a rough CBJ calculation, an 11.4% rise in an item weighing about 5% of the basket adds roughly 0.6 percentage points to annual headline inflation, before any knock-on effects through freight and food costs.

The policy response

The central bank's board raised the policy rate by 25 basis points to 6.75% on 15 September and set the Lombard repo rate at 8.25% and the deposit facility rate at 5.25%, Armenpress reported (see CBJ's analysis of the decision). The EDB said the move was driven by growing domestic demand and inflation expectations, noted that inflation had been above the target range of 3% plus or minus 1 point since February 2026, and said it expects the rate to be close to 7% by the end of 2026, which would imply a further increase.

The central bank's own third-quarter monetary policy report projects 2026 inflation of 4.2% to 4.5% depending on the scenario, easing to 2.7% to 3.4% in 2027, ARKA reported. CBJ has also reported that producer prices rose faster than consumer prices in January to August.

What to watch

• Armstat's October price data, and whether diesel's climb spreads into food and freight costs.
• The central bank's next rate decision, and whether it follows the EDB's expectation of a rate near 7%.
• Brent crude and shipping through the Strait of Hormuz, which Galstyan flagged as the main external risk to fuel prices.
• Food prices, which still rise faster than any other major category except alcohol and tobacco.

Sources: ARKA, 12 October 2026; ARKA weekly digest, 12 October 2026; ARKA, 5 October 2026; ArmBanks, 5 October 2026; ArmBanks, 7 September 2026; ARKA, 4 September 2026; ARKA, 15 September 2026; Armenpress, 15 September 2026; ARKA, 21 September 2026; NEWS.am, 11 August 2026

Correction, 13 October 2026: an earlier version said the EDB first published its 4.4% forecast in a review reported on 7 September. NEWS.am reported the same forecast on 11 August 2026.