The FINANCIAL -- ISET’s Khachapuri Index kept declining in April, very much in line with the multi-year seasonal trend (see chart).  The average cost of cooking one standard Imeretian Khachapuri currently stands at 2.96 GEL, which is 3.2% lower month-on-month (m/m, that is compared to March 2015), and 11.4% lower year-on-year (y/y, that is compared to April 2014).

While the national average of Kh-Index took another dip in April, there is a quite a bit of variation in its geographic behavior. First, the Index is much higher in Telavi, Tbilisi, and Batumi (3.15, 3.07 and 3.03 GEL, respectively) relative to Kutaisi (2.64 GEL). The price difference between the cheapest (Kutaisi) and the most expensive (Telavi) locations thus stands at more than 20%, offering a nice arbitrage opportunity!

Second, while dropping in Tbilisi (down by 3.7%), Batumi (5.5%) and Kutaisi (7.8%), Kh-Index suddenly turned the other way in Telavi (Kakheti), adding 4.2%.

Interestingly enough, we observe this peculiar April kink every year since the national rollout of the Khachapuri Index in 2013. What may explain it is the fact that commercial production of Imeretian cheese – the main khachapuri ingredient – is not as widespread in Kakheti as it is in other parts of Georgia. Moreover, in April, most Kakhetian cows (particularly those held for commercial purposes) start migrating to upland summer pastures (in Tusheti and elsewhere), reducing the supply of fresh milk and applying upward pressure on the local prices of traditional dairy products, such as cheese. Internal and international tourist arrivals, which heavily focus on Kakheti at this time of the year, are another factor behind higher cheese and khachapuri prices in Kakheti, in April and through much of the summer.