The Khachapuri Index reached its historical maximum in October 2019.

The Index continued its upward trend which started in May 2019 and took a big leap in October 2019. The average cost of cooking one standard Imeretian khachapuri reached 3.90 GEL, which is 6.6% higher month-on-month (compared to September 2019) and 8.6% higher year-on-year (compared to October 2018). All ingredients contributed to y/y Khachapuri Index inflation. The price of cheese was up by 12.5%, wheat by 6.6%, butter, eggs, and milk by 3.4%, and yeast by 0.1%. Moreover, in general, the increasing trend at this time of year is driven by a seasonal decline in the supply of fresh milk which drives the Khachapuri Index price up.

During the same period, the Georgian lari depreciated against the US dollar by 12%. Furthermore, the exchange rate between the lari and the dollar also reached its highest level in October 2019 at 2.97 on average. Georgia imports more than half of the food products consumed, and depreciation affected the prices of imported commodities. The depreciation of the Georgian lari put upward pressure on the price of imported khachapuri ingredients produced with imported milk powder (substituted for fresh milk), butter, and wheat.

Not surprisingly, the Khachapuri Index is reflecting the broader price dynamics in line with the official Consumer Price Index (CPI). Recent Khachapuri Index dynamics are consistent with the Geostat-reported general inflation level, which also increased in September by 6.4% in yearly terms (the CPI for October 2019 is not available yet). Inflation in September 2019 was mostly driven by price increases in categories such as food and non-alcoholic beverages (up by 11.7%), alcoholic beverages and tobacco (14.6%), household equipment and routine maintenance of the house (4%), restaurants and hotels (6.7%), recreation and culture (6.9%).