ISET

ISET’s Khachapuri Index continued an increasing trend in October 2018, which is very much in line with the annual seasonal trend. The average cost of cooking one standard Imeretian khachapuri currently stands at 3.59 GEL, which is 1.1% higher month-on-month (compared to September 2018), and 1.2% lower year-on-year (compared to October 2017).

When comparing the average prices of khachapuri across cities, one can conclude that Tbilisi, the capital of Georgia, offers the lowest price. The average cost of a khachapuri there is 3.55 GEL, which is lower than the average prices in other cities. Moreover, looking at the minimum prices observed in every city shows that Tbilisi offers the greatest savings for those looking for the cheapest ingredients. Frugal people can save a solid 36.7% and pay just 2.60 GEL for one portion of khachapuri in Tbilisi if they invest time and effort into chasing the cheapest ingredients.

The average cost of cooking one standard Imeretian khachapuri in September 2018 was 3.56 GEL, which was 3.7% higher month-on-month (m/m, as compared to the previous month), and 2.1% lower year-on-year (y/y, as compared to the same month last year). However, khachapuri became cheaper for those earning in foreign currency as a result of the y/y depreciation of the lari relative to both the USD and EUR in September 2018. In September 2018, the GEL/USD exchange rate reached 2.61, which was 0.16 points higher than September 2017, and 0.08 points higher than August 2018.

The Khachapuri Index lost value in terms of USD, falling by 1.7% in September 2018 compared to the same period last year. The situation is similar when looking at the euro price of khachapuri, which was down by 4.2% y/y.

In September 2018, the Khachapuri Index showed an upward seasonal trend, reaching 3.56 GEL. This is a 3.7% increase over the previous month (August 2018), but is 2.1% lower compared to September 2017 (y/y). Such an increase in prices at this time of year is not unique to the Khachapuri Index. The index is up due to the seasonal decline in the supply of milk and cheese (the main and most expensive khachapuri ingredient), with the supply of fresh milk falling from its peak of May/June.

The average cost of cooking one standard Imeretian khachapuri increased in all major Georgian cities. The price of khachapuri varied across Georgian cities ranging from 3.50 GEL, the minimum observed in Tbilisi, to 3.64 GEL, the maximum observed in Telavi. The high prices of khachapuri can be easily explained by the fact that it is currently Rtveli (harvest) season in Kakheti. Rtveli celebrations start at the end of August and continue until the middle of October. Over this period, Kakheti is very attractive for tourists.

In August 2018, the average cost of cooking one standard Imeretian khachapuri increased to 3.43 GEL, which is 3.8 % higher month-on-month (m/m, that is, compared to July 2018), but 0.5% lower year-on-year (y/y, compared to August 2017).

According to Khachapuri Index data, the price of wheat flour in different bazaars in Georgia has started to go up. The price of wheat rose by 1.6% in August month-on-month (compared to July 2018).

This increase follows a similar increase in the international market for this commodity. According to the FAO Food Price Index, the price of wheat has gone up by 8% month-on-month. High global prices of wheat this year have been attributed to a low supply in the world market. This will eventually be reflected in domestic wheat prices in Georgia, where the self-sufficient ratio for wheat is 15% and the country heavily depends on wheat imports. Almost 100% of wheat imports come from Russia. It is expected that higher wheat prices in the world market will be transmitted to Georgia in the coming months, leading to further increases in the price of wheat and wheat products. According to ISET’s policy paper “Price Transmission on the Wheat Flour Market in Georgia,” it takes around 6 months for international wheat prices to be transmitted fully into the domestic market.

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