EastFruit analyst note that consumer price levels drop to the National Bank’s target range in Georgia. After rising fast since 2019, the retail price growth has finally cooled down.
Data source: GeoStat
Month-over-month, food prices have reduced by 1.7%. GeoStat highlights the group of vegetables, which got 5% cheaper. The average price level for all goods and services, which includes practically everything a Georgian consumer buys not just food or vegetables, has gone down by 0.1%.
Annual inflation, or the annual change in general retail prices for all goods and services, amounted to 1.5% in May 2023. Which is well below the target of 3%. Food price changes were very close to the goal: the average retail price for the food group was 3.3% higher than a year before. Vegetables are a bit out of range – the average price for the group has increased by 6.3% compared to May 2022. However, there should be negative pressures on the prices in June.
Annual price changes for fruits and vegetables look followingly for May 2023:
Data source: GeoStat
GeoStat publishes price indices for 23 fruits, nuts, and vegetables. As we can see, most products have gotten cheaper in annual terms.
Only two products remain very expensive compared to the previous year: onions and potatoes. Thus, these two products are the main reason for a 6.3% annual growth in vegetable prices. Dramatic changes are likely to come in June in this regard. The idea behind this statement is that a new season is starting. Local harvest for both onions and potatoes will be very active in June, local supply will increase, and there should be significant downward pressure on the prices.
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We remind you that high retail prices for fruits and vegetables in the 2022-2023 season in Georgia had multiple causes: increased local demand from the influx of russian citizens, unfavorable weather resulting in overall poor harvest for some key crops like potatoes in 2022, lasting high inflation in Turkey and generally, the inflation imported from abroad. The latter is a very important piece of the puzzle, given that Georgia depends on imports, and this dependence is especially significant in the first half of 2023, given the first two factors on the list.
In The future, much will depend on the situation in Turkey and the Lira’s exchange rate.
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