October 06, 2014 Kh-Index | Prices In georgia are on an upward trend
06 October 2014

The ISET Khachapuri Index continued moving along its upward seasonal trend, reaching 3.35 GEL in September 2014. This is 3.2% higher compared to August 2014 (m/m) and 13.7% higher compared to September 2013 (y/y). Such a sharp increase in prices was not unique to Khachapuri ingredients, however. As reported by GeoStat, the general Consumer Price Inflation (CPI) in September 2014 reached 1.2% in monthly terms and, what is more alarming, 4.8% relative to September of last year (y/y). At least to some extent, this may be caused by the extreme drought conditions in July and August, which decimated cereal, potato, and vegetable harvests of smallholder farmers, and reduced the quality of pasture.

All khachapuri ingredients, except eggs, have significantly increased in price in September 2014: cheese added 19.7%, flour - 17.2%, butter - 12%, yeast - 12%, and milk - 7.5%. Based on a much broader basket of goods, annual inflation in the food component of CPI has been driven by price increases in the following three subgroups: “vegetables” (27.3 %); “fruit and grapes” (16.9 %); and “milk, cheese, and eggs” (12 %).

It is worth mentioning that inflation was persistent not only in the food component of CPI. Significant y/y price increases were observed in the following categories: “health” (up by 15.2%), “restaurants and hotels” (5.4%), and “housing, water, electricity, gas, and other fuels” (3.4%).