Khachapuri And Consumer Price Index Inflation

The FINANCIAL -- In October 2014, the seasonal rally of ISET’s Khachapuri Index came to an unexpected (temporary) halt. At 3.35GEL, the Index dropped 0.1% both month-on-month (relative to September 2014) and year-on-year (relative to October 2013).

The general Consumer Price Index (CPI) inflation, reported by the Georgian National Statistics Agency in October 2014, stood at only 0.3% in monthly terms. Annual CPI inflation, however, reached a more significant level of 3.4%.

The main contributors to y/y Khachapuri Index deflation in October were cheese (-3.4%) and eggs (-7.7%), while price increases were observed for the following products: flour (18.4%), butter (5%), yeast (9%) and milk (6.8%).

The CPI basket includes many more categories of consumer goods. Fairly large increases were recorded for the following goods categories: food and non-alcoholic beverages (7.8 %), healthcare (5.6%), and restaurants & hotels (by 2.8%).

Looking at the food category, vegetables (up by 35.6%), fruit & grapes (10.8%) and milk, cheese and eggs (8.6%) experienced the sharpest price increases, easily explained by their seasonal production patterns.  Medical products, appliances and equipment (up by 10.6%) and out-patient services (3.3%) were the main drivers of inflation in the healthcare category.

It is worth noting that prices for clothing and footwear extended a series of monthly decreases, dipping 6.4% below their level in the same period of last year (October 2013).