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).

Exchange rate fluctuations are one of the most popular topics for debate in today’s Georgia. Given that Georgia’s self-sufficiency ratio in food products is quite limited (34%), Lari depreciation might be particularly hurtful for Georgian consumers, who spend considerable amount of their income on food.

Oil prices have endured a large and persistent decrease due to increased worldwide production and the weakness of global demand. Prices are soon expected to stabilize around USD 60/barrel. ISET-PI and GET have focused on the improved terms of trade that Georgia could potentially see due to its high share of energy imports compared to its GDP indicators.

For resilient economic development in Georgia, the country should encourage exports of higher-value added goods. In this report, ISET-PI and GET have found that Georgia might be able to develop a comparative advantage when it comes to exporting higher-value energy-intensive products. According to projections of its electricity network operator, Georgia will develop excess capacities of low-cost electricity in the next decade.

ISET-PI launched the Retail Food Price Index in July 2015. The project is implemented thanks to the cooperation of the largest Georgian retail chains including Carrefour, Goodwill, Fresco, and SPAR. While data from the individual retailers are confidential, the average of prices from all stores can be combined to create a general FPI, as well as FPIs for individual products.