Page 14 - GEORptMay19.pdf

4.2 Inflation
4.2.1 CPI dynamics
Headline inflation eases in Georgia
Consumer prices in Georgia stood at 3.7% y/y in March, up from the 2.3% y/y rise seen in February, the national statistics office reported. The central bank said that the increase in annual inflation in March was a one-off caused by the hiking of excise taxes on tobacco—which contributed 1.3 percentage points to inflation.
“According to current forecasts, with other things being equal, inflation will move to the 3% target level after the expiration of this single (exogenous) factor,” it added in a statement. Annual inflation both this year and in the medium term will fluctuate around the target rate, the central bank said.
The monetary board of the National Bank of Georgia on May 1 cut its refinancing rate by another 25bp to rate of 6.50%. According to central bank estimates, there is still the necessity of policy normalisation—that is, gradual policy easing. However the speed of normalisation will depend on how fast the output gap closes on the one hand and how strongly increased regional macroeconomic risks are transmitted to the Georgian economy, on the other.
14 GEORGIA Country Report May 2019 www.intellinews.com