11.Jan .2022 17:15

Inflation Rate Will Be Down From Late This Year – Gov’t

Inflation Rate Will Be Down From Late This Year – Gov’t
views 311

In December 2021 the Consumer Price Index increased by 0.3% compared to the previous month, while the annual inflation rate amounted to 13.9%, show the official data from the National Statistics Office of Georgia (Geostat).

"Georgia, which is integrated into the world economy, cannot be an exception. It is important that this is a pandemic effect, which represents a one-time and temporary problem. According to the forecast of the National Bank, we expect the inflation rate will be down from late this year it is possible to reach the pre-pandemic levels, which is a maximum of 3-4%. We are not waiting for this moment and we are actively interfering in the process of price stabilization," said Natia Turnava, Minister of Economy and Sustainable Development.

According to the Minister, inflation hiked due to the COVID-pandemic, and it happened not only in Georgia, but all over the world. “If we look at the preliminary results of the region or different countries, for example, annual inflation hit 40-year high in the USA, while in Germany it is at the peak of the last 29 years. Inflation in our neighboring Turkey hit 19 years high and reached 36%. This is happening against the background of the devaluation of the lira, while Georgian GEL is, on the contrary, quite strong and stable," Turnava said.

Her analysis is fully shared by the Finance Minister. Lasha Khutsishvili believes that Georgia cannot be isolated neither from spreading COVID, nor in terms of high inflation. According to Khutishvili, the inflation rate in Georgia is in line the world trend.

"Now, we can say that just as a country cannot be isolated from the rest of the world from Covid-19, so it cannot be an exception in terms of inflation. We see the historical maximum of annual inflation in our trading partners and in the world. We take all measures to sharply reduce the deficit; also, the tightening policy by the National Bank guarantees that this inflation will not continue for a long time. We estimate that inflation will start to decrease by the end of the first quarter and by the end of the year it will not be far from the target," Finance Minister said.

According to Geostat, the annual inflation rate was mainly influenced by price changes for three main groups.

Food and non-alcoholic beverages: the prices in the group increased by 15.6%, contributing 5.01 percentage points to the overall annual inflation rate. Within the group the prices increased for the following subgroups: oils and fats (24.5%), vegetables (20.7%), bread and cereals (20.2%), sugar, jam, honey, chocolate and confectionery (19.8%), fish (16.5%), milk, cheese and eggs (15.3%), mineral waters, soft drinks, fruit and vegetable juices (13.5%), fruit and grapes (10.5%), meat (10.2%), coffee, tea and cocoa (6.1%);

Transport: the prices increased by 17.3%, contributing 2.24 percentage points to the annual inflation rate. Within the group the prices increased for the operation of personal transport equipment (24.9%);

Housing, water, electricity, gas and other fuels: the prices for the group posted a 43.5% increase, which contributed 3.64 percentage points to the annual inflation rate. The prices were higher for the following subgroups: water supply and miscellaneous services relating to the dwelling (64.7%), electricity, gas and other fuels (64.4%), maintenance and repair of the dwelling (8.0 %). In the same period prices were lower for actual rentals for housing (-3.1 %).