ISET

Khachapuri index changes its value in different regions according to seasonal demand and supply peculiarities. The latter are affected by milk production cycles (low in fall and winter, high in spring and summer), Georgia’s religious calendar (e.g. the Great Lent), as well as the ups and downs in tourism.

Given khachapuri’s ubiquity, we used our index to estimate real income per capita for different Georgian locations, measured in khachapuri portions. We do so by dividing the average nominal income in each region (using the latest available GeoStat data from 2014) by the corresponding Kh-Index (average for last 12 months). The result of this division stands for the number of (real) khachapuri portions a family can afford in each city of interest.

In October, 2015, the average cost of cooking one standard portion of Imeretian Khachapuri climbed to 3.61GEL, which is 4.5% higher m/m (compared to September 2015), and 7.9% higher y/y (compared to the same month of previous year, October 2014).
The main contributors to Kh-Index y/y increase were cheese (12%), milk (13.2%), butter (7.4%) and yeast (22.1%). Flour price did not change y/y, while egg price declined by 5.2%.
The monthly (m/m) Kh-Index increase is mainly due to the usual seasonal trend in domestic milk products as supply of fresh milk declines from the peak it reaches in May and June. The annual (y/y) increase is mostly due to a slight upswing in consumer price inflation, related to the depreciation of the GEL against USD. The inflation factor is strongest in case of imported food commodities such as milk powder and yeast.

The cost of cooking one standard portion of khachapuri stood at 3.46GEL in September 2015. Compared to the previous month (August 2015) the Index lost 0.9%; in yearly terms (compared to September 2014), it actually gained 3.2%.
While most expensive in the average sense, Batumi offers the greatest savings for those “frugal housewives” who care to look for the cheapest ingredients. A frugal housewife would pay only 3.07 GEL for one portion of khachapuri in Batumi, saving a solid 14% of the average price. Tbilisi and Kutaisi are somewhat less friendly for frugal housewives, offerings saving of 12.4 % and 11.8%, respectively. There are even fewer bargains in Telavi – the smallest city in our sample, – where frugal housewives could save only about 10.7% of the average, paying about 3.09GEL for one portion of khachapuri.

The average price of cooking one Imeretian Khachapuri currently stands at 3.46 GEL, which is 0.9% lower month-on-month, and 3.2% higher year-to-year. While the Index is primarily affected by the price of Imeretian cheese (the most expensive Khachapuri ingredient), during much of 2015 some moderating influence on the Index has been exerted by flour.
Last month, the price of this strategically important product fell by 3% m/m, and by 6.3% y/y. To some extent, this change reflects external developments that are beyond Georgia’s control. This is so because Georgia heavily relies on the imports of both milled flour and raw wheat (which is milled locally).

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