In February 2018, the Khachapuri Index continued its downward trend and dropped to 3.67 GEL. This is 1.2% lower compared to the previous month (January 2018) and 0.3% higher compared to February 2017 (y/y). The main contributors to y/y Khachapuri Index inflation were butter (4.1%), milk (1.7%), and cheese (0.7%), while the price of eggs and wheat dropped (-3.3% and -2.5%, respectively).

Milk and milk products are only drivers of the Khachapuri Index increase in yearly terms. As we have explained in our Food Price Index publication, the reason might be that the export of bovine animals increased in 2017. Accordingly, it is not surprising that milk production decreased. According to Geostat preliminary numbers, the production of fresh milk has gone down by 7.07%. The lower supply has led to increased prices in milk and milk products. However, there is a growing interest in the dairy sector in Georgia, and hopefully, soon we will overcome this milk shortage.

Recent Khachapuri Index dynamics are similar to GeoStat-reported general Consumer Price Inflation (CPI), which increased in February by 0.2% in monthly terms and 2.7% y/y. In monthly terms, food and non-alcoholic beverages increased by 0.4%.