Georgia’s inflation  2.4-fold  exceeds the target

Georgia’s inflation 2.4-fold exceeds the target

access_time2021-04-05 12:00:25

In March, the target inflation rate was set at 3%, the real inflation was 2.4 –fold higher and amounted to 7.2%. The main factor caused the growth of inflation was the lari’s  devaluation and amid the ongoing collapse of the lari, inflation, at least in the coming months, will continue to grow. In 2020, inflation was lower - the devaluation of the lari was more significant than now, but it was compensated by low energy prices. The current fuel price hikes  further boost  a large-scale rise in prices.

 

Inflation is also boosted by the rise in the cost of utility tariffs - for gas, electricity and water as well as by an increase in international grain prices which automatically raises  the price of flour, despite the state subsidies .

 

The price hikes also affected food (5.7%), healthcare services (13.7%), transport (5.8%), alcohol and tobacco (8.9%).


 

 

The Sakstat data covers  the period until March 20, but the prices did not stop rising , moreover, the lari’s depreciation  has  accelerated since March 20, and there is no reason that April inflation will be lower than in March.

 

A big spike  in fuel prices will also boost inflation - currently, the cost of fuel ranges from GEL 2, 6 to GEL 2, 8 per liter, and as the Union of Oil Products Importers predicts, prices will keep growing. Thus,  inflation will also grow, which will further and further deviate from the target.

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