ISET

In May 2016, the average cost of cooking one standard Imeretian khachapuri declined to 3.08 GEL, which is 2.7% lower month-on-month (that is compared to April 2016), but 7% higher year-on-year (compared to May 2015).
While the national Khachapuri Index is driven down by positive seasonal dynamics in the SUPPLY of Imeretian cheese, the local indices are quite susceptible to sharp variations in local DEMAND conditions. Thus, while Telavi, Tbilisi and Kutaisi see very little differences in the price of Imeretian cheese (ranging between 4.70 GEL/kg in Kutaisi to 5.73 GEL/kg in Tbilisi), Batumi currently stands out as Georgia’s priciest market due to an early start of the summer tourism season. In May, Imeretian cheese traded in Adjara at the exorbitant price of 8.00 GEL/kg (!) which we would normally observe only in the cold and milk-less winter months.

In May 2016, the average cost of cooking one standard Imeretian khachapuri declined to 3.08 GEL, which is 2.7% lower month-on-month (that is compared to April 2016), but 7% higher year-on-year (compared to May 2015).
The main khachapuri ingredient is Imeretian cheese, and, naturally, its price is the main driver of our Khachapuri Index. Over the years, we have been observing a sharp upward movement in the price of cheese from July till January (see graph), and an equally sharp downward movement from February till June. These seasonal price dynamics are closely tied to the annual production cycle of Georgia’s fledgling dairy industry. The prices of cheese, yoghurts any other products that are based on fresh milk are the exact mirror image of this cycle. They go up when there is little production (in fall and early winter), and down when there is plentiful supply (in spring and early summer).

Spring brings happiness in peoples’ lives not only because of the brighter days but also because the increased supply of many seasonal products. This is reflected in the production cost of Khachapuri. In April 2016, the national average cost of preparing one standard Imeretian khachapuri went down to 3.16 GEL, 3.2% lower compared to March 2016 (but 6.9% higher compared to April 2015).
In April, more cheese was brought to the market, leading to a decline of the Khachapuri price index in almost all surveyed cities. Compared to last month, in Telavi the index went down by 6.9%, in Batumi by 6.6%, and in Tbilisi by 4.1%. Surprisingly, only in Kutaisi, the home of Imeretian Khachapuri, the index went up by 4.9%. How can this be explained?

In March 2016, the average cost of cooking one standard Imeretian khachapuri declined to 3.27 GEL, which is 5% lower month-on-month (that is compared to February 2016), and 6.9% higher year-on-year (compared to March 2015).

The negative monthly change in Kh-Index follows the traditional seasonal trend in fresh milk production in combination with a temporary slump in demand due to the Great Fast of Lent, which started on March 14.
The annual increase in Kh-Index, however, reflects an uptick in annual price inflation. Practically all khachapuri ingredients (with the exception of flour, which dropped 5.1% y/y) went up in price compared to last year: cheese added 12.5%, eggs - 1.6%, milk - 4.3%, butter - 9%, and yeast - 8.6%. These increases are very much in line with the official estimate of annual inflation by GeoStat, currently standing at 4.1%. Just like the Khachapuri Index, in monthly terms, CPI inflation is actually in the negative territory (March CPI is down by 0.3% m/m).

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