March 2020 | The khachapuri index increases by 26.6%
21 April 2020

The data behind the Khachapuri Index is ordinarily collected in open bazaars. However, given the coronavirus situation and the related recommendations, our researchers can no longer visit bazaars to collect data. To overcome this challenge, around the end of March 2020 we constructed a short online survey and asked our readers to fill out a questionnaire on the prices of khachapuri ingredients observed in bazaars from various Georgian cities.

The data obtained show that the average cost of cooking one standard Imeretian khachapuri reached 4.45 GEL in March 2020. The price jumped by 2.2% month-on-month (compared to February 2020), and by 26.6% year-on-year (compared to March 2019).

The price of khachapuri ingredients was affected by several factors, with opposing effects. Two major factors are responsible for the increase in prices. The first cause being depreciation of the Georgian lari; in March 2020, the GEL/USD exchange rate reached 3.04, 0.36 points higher than March 2019. As dairy producers are heavily dependent on milk powder imports, its increased import price, due to currency depreciation, led to a subsequent rise in the price of milk and milk products. Another reason behind the rise in price is food panic-buying, related to the coronavirus pandemic, which pushes prices even higher.

The opposing effects that had a negative influence on prices are the following:

• Domestic production of milk starts to grow around March-April, which pushes prices down;

• The Easter effect, more specifically Great Lent (which began on 2 March), might have strengthened the downward price trend, as demand on cheese and other milk products is reduced during the period.

However, as the price of khachapuri ingredients increases (in both monthly and yearly terms), the latter effects will outweigh the former. Increased milk production in upcoming months will likely decrease the demand for milk powder. Thus, prices of milk products are not likely to rise any further.

A more detailed discussion on the milk market can be found in ISET’s recent publication on the current pandemic and food supply chains in Georgia.

We thank our dear readers for their support and we wish you good health!