High consumer prices remain an issue in Georgia. Earlier, some local stakeholders expected a reduction in the annual growth of consumer basket prices or inflation, but this has yet to happen. EastFruit analysts note that, as before, food prices in Georgia remain exceptionally high.
Data source: GeoStat
The consumer price index, which measures the price level of all goods and services, or the basket of the Georgian population, has increased by 1% in January 2023 over December 2022. The general consumer price level compared to the last year’s January is above 9% – triple the size of Georgia’s target.
As before, annual growth in food prices remains way over the growth of the average price of all goods and services. The official data suggests that food in Georgia was 15% more expensive this January than in January 2022. The month-over-month increase is similar to that of the basket – 1%.
High prices on food in Georgia have drawn much attention recently. The prime minister has ordered the relevant agencies to research the causes and find solutions. Preliminary research found huge discrepancies between the import prices and the retail prices. There are cases where the difference between the two is 100%. This has sparked suspicions that the importers are selling products at high markups.
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It will be logical if the research finds that the importers’ overall profits have increased. Local demand has grown, which is widely linked to the Georgian economy recovering from Covid and the mass immigration of Russian citizens to Georgia. Moreover, due to unfavorable weather conditions, 2022 was not easy for many Georgian farmers. So the importers have a bigger room to operate.
However, not all of the gap between the import prices and the retail prices will be importers’ profits. Imports still have quite a way to go to appear on the shelves of the markets after they have been imported. Some costs have indeed risen along this process. For example, the above graph shows that business transportation costs have also increased. In year-on-year terms, the price of transportation by road for Georgian businesses has gone up by 18% – 3 percentage points more than the annual increase in food prices.
The list of fruits, nuts, and vegetables with the highest annual growth in retail price:
Data source: GeoStat. A discrepancy of 1% may exist in some cases due to rounding.
GeoStat publishes retail price indices for 23 fruits, nuts, and vegetables. 13 of these positions show the highest price for January in 2023. Twelve positions are very close to the inflation target of 3% or below the target. Prices in annual terms have decreased in seven positions.
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