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 June27, 2003 

Baked Prices?: Increase in cost of bread creates hardships and conspiracy theories


The increase in bread prices has created a hardship for financially-vulnerable families.

The price of bread in Armenia has increased sharply since the beginning of summer, creating hardships for some whose measure of existence is often equated with the cost of the daily staple.

Just a couple weeks ago the average cost of a 700 gram loaf was 150 drams (about 25 cents). Today the price has increased to between 170-200 drams (about 30 cents). But while the price has increased, the average loaf has decreased in size to 550 grams. In other words, less bread costs more money.

Those are not good numbers for families like Tamara Muradyan's.

"Our family needs four to five loaves of bread every day," says the unemployed mother. "So it means that if before we paid 600 drams (about $1.05) for bread every day then now we have to pay 850 drams (about $1.40). I don't even talk about the fact together with the increase of prices for bread the prices for all other foods have increased as well."

As the price of bread is something of a scale by which other food goods are priced, its increase signals a rise in the prices of vegetables, fruits, etc.

Officials blame the increase on the cost of flour and wheat brought from Russia. (Though it is also known that Armenia also gets those products from Greece and Turkey.)

"This increase of prices is not something new, as every year flour becomes more expensive during this period of time," says former Minister of the Agriculture David Zadoyan. "This year it has happened a little bit sharper because the crop of the last year is coming to its end gradually but demand remains the same."

The price of wheat and flour has driven up the cost of bread, a staple of the Armenian diet.

But citizens suspicious of the reasons behind the increase point to the fact that the amount of Value Added Tax has not increased on those goods. If wheat and flour from Russia had increased in price, then the VAT at the border should have increased. Documents show, however, that a ton of those goods purchased last week showed the same VAT as a ton purchased two months ago.

Armenia's own grain production produces enough wheat and flour for about 40 percent of its demand.

There are about 1,000 bread bakeries in the republic. At the end of May, they were paying 7,000 drams (about $12) per 50-kilogram sack of flour. The current cost is 12,000 drams (about $20).

Press Secretary of the Ministry of Agriculture Vahan Martirosyan says that the fluctuation of prices for bread were also noticed before, however, some period later prices had been stabilized as these days the market decides scale of prices.

While a slight seasonal increase is routine, the present increase is the highest since 1995, when the State relinquished control of price fixing.

Armenians willing to find conspiracy even in bread prices believe the increase is an act of oppression by politicians.

"It isn't a casual increase but it has political grounds as elections are finished and they can easily put pressure on people," says pensioner Hovhanes Baghdasaryan.

That issue became a subject of speculations for many political figures, who say that the prices have already been increased for eight months in Moscow. Here, however, prices were kept steady so that before elections citizens did not lose confidence in their leadership.

Among those decrying the politics of bread is former presidential candidate Artashes Geghamyan.

"They conducted elections, gave bribes and now they must restore their financial situation," he says. "The quickest way of bringing back spent money is an increase of prices for bread."


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