The Khachapuri Index has declined in February, with the average cost of cooking one standard Imeretian khachapuri reaching 3.66 GEL. This is 0.2% lower month-on-month (compared to January 2017), and 6.2% higher year-on-year (compared to February 2016).

In general, the downward trend in the Khachapuri Index at this time of the year is driven by the seasonal decline in cheese prices. The price of cheese has declined by 1.2% month-over-month. This decline could be explained by the fact that the supply of fresh milk starts to increase from this period of the year. It is expected that this trend will continue in the next month, not only because of increased supply but also because of lower demand for milk and milk products due to a fasting period.

If we look at the cheese price chart, we will observe that the cheese price level this year is above that of last year’s in both January and February. As was predicted in the previous publication of the Khachapuri index (published two weeks ago), the price of cheese keeps trending higher than last year’s level, and cheese is the main contributor to y/y Khachapuri Index inflation. Possible reasons were discussed, and an increased excise tax rate on oil products was named as one of the factors that have led to the price increase.