GIPA professor Merab Kakulia, former vice-president of the National Bank of Georgia and currently head of the Rondel Foundation's Financial Stability and Competitiveness Research Center says, that "inflationary expectations in the community and business circles are quite strong.
The point is that according to the report of the National Bank, which is based on a survey of 18,000 business entities, inflationary expectations have increased in January compared to December. In particular, the number of respondents who think of increasing prices by more than 8% in the next one year has increased. At the same time, last month, the number of participants who observed a price increase close to 4%-6% after 1 year decreased.
"First of all, the inflation rate has deviated significantly from the target rate for a long time, which itself generates inflationary expectations. In addition, there is considerable uncertainty surrounding the Russia-Ukraine war. Accordingly, economic actors and the community, in general, believes that prices are more likely to increase," Merab Kakulia said.
To the question, what factors could hinder inflation growth this year, the leading researcher of the Rondel Foundation identified the rate of economic growth as one of the factors.
"Certainly, hundreds of thousands of migrants who entered Georgia after the start of the war play an important role in economic growth and reflected in the demand increase. This is always a factor of inflation", he noted, adding that the tightening of global monetary policy, the tendency of food price decrease, and also the reduction of tariffs related to logistics, will likely help to reduce inflation.
"These factors are added to the upward dynamics of the lari exchange rate, which, of course, neutralizes future inflationary impulses from the supply side," added Merab Kakulia.
