The average price of cooking one Imeretian khachapuri currently stands at 3.43 GEL. Compared to the previous month (August 2016) the Khachapuri Index gained 8.6%, however in yearly terms (compared to September 2015), the Index dropped 0.8%.
With the milk supply dwindling for seasonal reasons, cheese prices are on the rise in all Georgian cities. Interestingly, however, the highest monthly increase (27.7%) in the price of Imeretian cheese was recorded in Telavi, the capital of the Georgia’s main wine producing region, Kakheti. Moreover, cheese prices in Telavi are up not only month-on-month, but also compared to last year’s September (by 4.9%). At 7.66 GEL per kg, Telavi is currently the most expensive place for Georgian cheese lovers, ahead of Kutaisi, Batumi and Tbilisi.
While gradually increasing since June, in line with its seasonal trend (driven by a gradual decline in the production of fresh milk), the Khachapuri Index remains almost 10% below its level exactly one year ago. Constructed as a weighted average of the prices of various khachapuri ingredients, the Index is particularly sensitive to changes in the price of Imeretian cheese, its most expensive ingredient. The recent spell of annual deflation in the Khachapuri Index is thus a reflection of a peculiar sagging in the price of cheese (see table). For example, in August 2016, one kilogram of Imeretian cheese fetched only 6.4GEL, 18% less than in August of last year (7.8GEL).
In August 2016, the average cost of cooking one standard Imeretian khachapuri increased to 3.15 GEL, which is 4.8 % higher month-on-month (m/m, that is compared to July 2016), but 9.6% lower year-on-year (y/y, compared to August 2015).
The most interesting finding emerging from the August data concerns price dispersion across Georgia’s major cities. Our data come from Batumi, Kutaisi, Tbilisi and Telavi, and, as is easy to see on the chart, not only are prices in all locations moving in tandem over time (this is nothing unusual), but also the gap between the cheapest and the most expensive cities (for khachapuri lovers, that is) reached an all-time minimum of 10-15 tetri per one khachapuri portion. This is far lower than the 40-50 tetri gap we have been observing through much of the Khachapuri Index history.
On the back of a sharp y/y decline in the price of Imeretian cheese (down by about 10 and 18% in July and August 2016, respectively), the Khachapuri Index took a big hit in August 2016. Having reached the seasonal bottom in May, the Index increased in June due to regular seasonal factors (tourism-related increase in demand and a gradual slowdown in domestic milk production). Yet, its behavior in July and August represents a major departure from the multi-year pattern we have been observing since 2008. In July, instead of going up, the Index dropped 3 tetri (to 3.01 GEL). The modest monthly increase of 14 tetri in August left the Index well below its last year value: 3.15 compared to 3.49 GEL in August 2015, representing annual Kh-Index deflation of 9.6%.