Page 18 - GEOGRptJun19

4.2 Inflation
4.2.1 CPI dynamics
Georgia’s inflation accelerates to 4.1% y/y in April
Consumer prices have risen by 4.1% over the past 12 months in Georgia, with the country experiencing its highest annual inflation rate since January 2018, statistics office Geostat reported.
The target inflation rate set by the National Bank of Georgia is 3% for 2019-2021.
Georgia’s central bank held its benchmark interest rate at 6.50% percent on May 1, citing forecasts that suggest annual inflation will stay close to its 3% target this year. The base effect following the raising of tobacco excise taxes will keep it, however, above the target until Q1 next year, but it may not be far away from what is aimed for.
The central bank itself 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.
The prices of alcoholic drinks and tobacco surged by nearly 18% through Q1.
The average inflation rate over the past 12 months rose to 2.6% y/y in April from 2.5% y/y in March and 2.4% y/y in January and February. However, it eased through 2018 after peaking at to 6.1% y/y in January of that year.
The most significant price changes over the past 12 months as of April were for alcoholic beverages and tobacco, which increased by 21.1% y/y contributing 1.38pp to the 4.1% annual inflation. Tobacco prices soared by 44% y/y. Recreation and culture prices increased by 7.2% y/y (+0.41pp).
18 GEORGIA Country Report June 2019 www.intellinews.com