Soaring fuel prices are putting pressure on local manufacturers and supply chains, ultimately increasing production costs, says Iva Chkonia, former head of the Distributors Business Association.
According to Chkonia, international shipping costs have risen by 20%–50%, while domestic logistics expenses have also increased, creating significant challenges for both importers and local producers.
He noted that distribution companies are heavily dependent on diesel fuel but have so far managed to avoid proportional price increases by absorbing higher costs through lower profit margins. Logistics accounts for 3%–15% of a product’s cost, depending on the category. Chkonia said that although transporting goods from Lagodekhi has become more expensive for his own company, it has not yet raised prices.
The relative stability of the Georgian lari against the USD and EUR has also helped contain prices, he added, although smaller businesses are finding it increasingly difficult to absorb the additional costs.
Chkonia highlighted agriculture as a particularly vulnerable sector, as fuel-intensive machinery makes land preparation and planting more expensive. He said temporary excise tax cuts or targeted support for farmers could provide significant relief, especially for small-scale producers.
