Inflation hit a record high in Georgia for the last 10 years and amounted to 12.8%. Such a high inflation was observed in the country in May 2011 for the last time. As of August, prices were up on all commodity groups, including food – up by 16.2%, transport – up by 22.5%, healthcare – up by 10.9%.
Soso Berikashvili, Expert and Dean of the Caucasus University School of Economics declares that the main reason, which impacts on the high inflation is oil price growth.
“We see that fuel prices are increasing, which directly reflects on the transport service. In addition to that oil prices have grown significantly, as well as other products. This is so worldwide and it reflects on us.
It is painful for us that food price is increased. The refinancing rate is a tool of the National Bank to control inflation. As far as I know, the monetary policy rate is scheduled for this month and the refinancing rate may increase again, because if there is an expectation of high inflation, the rate will rise again, and this will be problematic for those who have a mortgage loan tied to the refinancing rate," said Soso Berikashvili.
According to him, the distribution of funds in GEL for the election has a negative impact on inflation.
"There is no short-term solution to the situation, and the budget deficit must be eliminated in the long-term. A long-term or medium-term strategy is needed to figure out where we are going and how to revive the economy. Now we are in the worst epidemiological situation and if all this is not corrected and the future does not appear, we will not be able to get out of the situation", he said.
The last monetary policy meeting was held on August 4, and the interest rate increased by 0.5% to 10%. The next sitting is scheduled for September 14.
