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YEREVAN, May 31 (Reuters) - Armenia's central bank has revised its annual inflation forecast for 2017 to 2.5 percent from 0.6 percent, the bank said on Wednesday.
Armenia has seen consumer prices decline recently as it felt the pain from the economic crisis in Russia, which hit consumer demand as remittances from Armenians working in its former Soviet ruler went down.
Annual deflation in 2016 was 1.1 percent.
The central bank said that its monetary policy helped "to neutralise deflationary environment and created conditions to achieve inflation target."
"The central bank estimates 12-month inflation will reach the low level of the fluctuations' corridor and in the projected term stabilise around the target of 4 percent," the bank said in a statement.
Annual inflation was at 1.4 percent in the first quarter of 2017, up from a forecast of 1.1 percent, mainly due to rise in consumer prices on fruits and vegetables and restoration of consumer demand.
The central bank governor Artur Javadyan told in an interview to Reuters in March that prices would remain at a low level over the short term, gradually boosting annual inflation to 4 percent by early 2019.
The Armenian central bank started cutting refinancing rates in August 2015 in order to spur both inflation and consumer demand. It last trimmed the rate to 6 percent in mid-February and kept it unchanged at 6 percent in March and May. (Reporting by Hasmik Mkrtchyan, writing by Margarita Antidze; editing by Maria Kiselyova and Pritha Sarkar)