Page 18 - GEORptNov19

Georgia’s currency has gradually weakened over the past couple of years. This has positively impacted the country’s wide current account gap, which has slightly narrowed. The nominal weakening of the currency was steeper than consumer price inflation, which resulted in a gradual and moderate depreciating of the currency in real effective terms. Under such metrics, the lari in August arrived at its weakest position since mid-2010. In real effective terms, the currency weakened by 13.6% y/y as of August. But the trend data shows that the average real effective exchange rate over the past 12 months weakened by only 1.6% y/y.
Food prices have made the largest contribution by far to the rise in consumer prices as of September. They surged by 11.7% y/y, contributing 3.5pp to headline inflation.
Higher tobacco excises enforced at the beginning of the year pushed up alcoholic beverage and tobacco prices by 14.6% y/y, resulting in a 0.97pp contribution to overall inflation.
4.2.2​ PPI dynamic
Georgia’s PPI for industrial products up 6.4% y/y in June
Georgia’s Producer Price Index (PPI) for industrial products increased by 6.4% y/y in June, rising from 4.1% y/y in the previous month and 5.4% in March, according to the national statistics office.
It was the highest producer inflation since August last year as cost increased faster for manufacturing (6.1% rise in March) and electricity, gas, steam and air conditioning supply (1.4% in March). Moreover, prices rebounded sharply for mining and quarrying (5.3% in March).
On a monthly basis, producer prices rose 1.1% in March after showing no growth in February.
18​ GEORGIA Country Report​ November 2019 ​ ​www.intellinews.com