September 8, 2015 FPI | Food Prices Decrease as "Rtveli" (Grape Harvest) Approaches
07 September 2015

The Georgian Lari has lost in value during the last couple of weeks, but, perhaps surprisingly, this has not yet translated into higher food prices. According to the latest results of ISET's Retail Food Price Index (FPI), the prices of food staples sold in the main Georgian supermarket chains have actually decreased by 0.6% during the last week of August (Aug 22-29).

This downward trend is mostly driven by the seasonal adjustment in the price of some fruits (e.g. 20% decrease for plums), vegetables (e.g. 7% drop for tomatoes), and cereals (e.g. rice is down by 3%). However, the biggest drop in price was registered for Georgian grapes (down by more than 23%). Such a drop is naturally related to the beginning of grape harvest (rtveli). Rtveli is not yet in full swing, but Georgian grapes have already entered the market, with much more to come in the following weeks.

There are reasons to believe that grape prices will be lower this year compared to 2014. First, this year's harvest is expected to be very good. Second, the demand for Georgian wine may not be as high in some of the traditional export markets, such as Russia and Ukraine, where people have fewer reasons for toast making and celebrations. As in the past, the Georgian government remains committed to subsidizing grapes in order to mitigate any negative external shocks on Georgian farmers.