Page 22 - GEORptJun20

4.2​ Inflation 4.2.1​ CPI dynamics
Inflation in Georgia rises in April on higher food prices
Consumer price inflation in Georgia accelerated to 6.9% y/y in April from 6.1% y/y in March as prices increased on average by 0.9% in the month, according to statistics office Geostat.
Georgia’s annual inflation rate has thus returned to a point near the highest level (7% y/y) seen in the last two years. That rate was posted in December after pessimistic expectations weakened the country’s currency during the second half of 2019. The tough intervention of the central bank reversed the trend during the first months of this year and low oil prices convinced the monetary authority to ease, albeit only marginally, its hawkish policy rate.
Georgia’s central bank (National Bank of Georgia, or NBG) on April 29 cut its refinancing rate by 0.50pp to 8.5%, pointing to local and global demand-side disinflationary pressures as well as lower oil prices.
The NBG predicted that due to temporary factors, inflation would remain high for several months, then gradually decline, and in the first half of 2021 approach the 3% target level.
The International Monetary Fund (IMF) expects Georgia’s consumer price inflation to keep easing. It sees 4.6% this year from 4.9% in 2019, and 3.7% in 2021.
Food prices rose by 3.0% in April while they were as much as 16.1% higher than one year earlier. The contribution to the overall headline inflation figure was major: 1pp of the 0.9% m/m monthly inflation (meaning that other prices decreased on average) and 5.04pp out of the 6.9% y/y annual inflation.
Collection of the latest inflation data was hindered by measures taken across the country to prevent the spread of the coronavirus (COVID-19), Geostat commented.
"Some retail outlets were not functioning, which made it impossible to register certain prices. Out of 1,800 outlets, 1,150 had cancelled all operations and as
22​ GEORGIA Country Report ​June 2020 ​ ​www.intellinews.com