INTRODUCTION

Increases in food prices and their volatility are global challenges, particularly affecting import-dependent developing countries where spending on food is relatively high. While major concerns regarding price dynamics and volatility are typically driven by the physical availability and financial accessibility of food.

Over the past few years, food prices in Georgia have been rising – with the country experiencing double-digit food price inflation. According to the National Statistics Office of Georgia (Geostat), in May 2022, food prices in Georgia surged by 22% year-over-year, followed by some moderation that led to an average annual inflation rate of 17.9% in 2022. After this sharp rise, the average annual inflation rate decreased to 3.9% in 2023, although this still represented a rise considering the base effect. Thus far in 2024 (up to July), there has been deflation of 1%. Despite these fluctuations, the overall price levels have shifted significantly upward, with some food categories continuing to experience price rises.

High food price inflation is particularly concerning for Georgian households as they allocate almost half of their total budget towards food expenditure: the share on food in total household consumption expenditure increased from 43% in 2019 to 48.7% in 2021 and then returned to approximately the same level (43.3%) in 2023 (Geostat, 2024). In comparison, average household expenditure on food and non-alcoholic beverages in the EU stood at 14.8% in 2021, ranging from the lowest share, of 8.3%, in Iceland to the highest, 24.8%, in Romania (Eurostat, 2023). As a result, high food prices place significant financial strain on the general populace, with low-income families being particularly affected.

Increased food prices often force low-income families to make difficult choices between their essential needs, such as housing, healthcare, education, and nutrition. Furthermore, as food prices rise, low-income families may resort to cheaper, less nutritious options, thus increasing the risk of malnutrition and related health issues such as obesity and diabetes. Most notably, food insecurity can have long-term impacts on children’s development, including cognitive and behavioral problems, poorer academic performance, and higher susceptibility to illnesses (Gundersen & Ziliak, 2015). Combatting food price inflation is also crucial for reducing poverty and for achieving targets 1 and 2 of the UN Sustainable Development Goals (SDG), as it directly affects the ability of families to escape poverty and it ensures that all people, especially those in vulnerable situations, have access to sufficient food year-round.

For the complete study, please refer to the attached policy document (above).