Price controls and their impact on economy
Tuesday, 14 March, 2023

Over the past few years, food prices have been increasing and Georgia has been facing food price inflation in the double digits. This is primarily due to international market trends that reflect concerns over decreased production, increased crude oil prices, as well as COVID-19 pandemic-related restrictions. Russia’s full-scale invasion of Ukraine increased pressure on international food markets already struggling with soaring prices. 

The food prices in Georgia experienced a sharp increase of 22% on a yearly basis in May 2022, but there was some moderation afterward, and the average annual increase during the rest of the year was 16.5%, as shown in Figure 1. Overall, the average price increase in the category of food and non-alcoholic beverages was 17.9% in 2022. In 2023, food prices continued to increase on an annual basis but at a smaller pace of 15% in January. This is particularly concerning as households in Georgia allocate almost half of their total budget towards food expenditures: the share of expenditure on food in total household consumption expenditure increased from 43% in 2019 to 48.7% in 2021 (Geostat, 2023). As a result, the high food prices are putting significant financial strain on the general population, with low-income families being particularly affected.