Otar Nadaraia, Chief Economist of TBC Bank declares, that if GEL exchange rate is kept at the current level, then inflation reduction is real.
"We have a similar forecast, if GEL exchange rate is kept at the current level, we are talking about the so-called effective exchange rate. In such a case, we think that in 2022 inflation will definitely decrease.
With us, GEL exchange rate is the main source of inflation. Domestic and foreign demand is also important, but because we are a small and open economy, dependent on imports, in my opinion, the exchange rate with us is the main factor," - said Nadaraia.
In October, the consumer price index in Georgia increased by 12.8% compared to the previous year. According to a report published by Geostat, the biggest impact on the inflation was due to the price increase of 18% in the food prices, as well as fuel prices, which pushed up prices in the transport group. Inflation of 12.8% is a record high inflation for Georgia over the last 10 years.
On the background of high inflation, the monetary policy rate has also been tightened. The NBG kept the refinancing rate unchanged at 10% in October.
