Rising commodity prices on the world market have an impact on inflation, especially on oil products, - Lasha Kavtaradze, economist at Galt & Taggart declares.
"Specifically, if we take oil products, we will see that prices for gasoline and diesel have increased by 40-40% in May, as well as the pressure is high on food and non-alcoholic beverages. Prices are rising in the healthcare sector as well. We have high inflation due to these factors”, Kavtaradze said.
He notes that GEL strengthening is a positive factor and it will be reflected on the prices after some months. However, he adds that this will not happen quickly, as prices are rigid and its adjustment takes time.
"The first reason for GEL strengthening is the fundamental factors: remittances have increased, tourism has revived in April and May. GEL strengthening is also related to the change in monetary policy. A positive factor was also the opening of land borders, which had an instant impact on the GEL exchange rate.
Positive expectations were created and citizens started to save their money in GEL, while the dollarization rate of deposits decreased. GEL strengthening trend will continue and we expect that the average exchange rate will be in the range of 3.15 - 3.25 GEL this year, " - Lasha Kavtaradze stated.
