Page 18 - GEORptOct19

4.2​ Inflation
4.2.1​ CPI dynamics
Georgia’s inflation accelerates to 4.9% y/y in August
Georgia’s annual consumer price index accelerated to 4.9% in August from 4.6% in the month before as food prices keep rising fast, Georgian National Statistics Office Geostat said.
Consumer prices likely came under pressure because the local currency weakened further during August prompting more central bank interventions to keep the lari above the psychologically important threshold of GEL 3 to the dollar. The short-term inflation data series, that might detail whether price fundamentals have changed significantly since Russia placed a limited ban on the import of Georgian goods and discouraged tourism in Georgia in the wake of anti-Russian protests that started in June, is not yet available. The lari underwent a certain weakening during the first half of the year, with a positive impact on the trade balance.
Georgia’s central bank targets 3% annual inflation and has maintained a hawkish 7.5% refinancing rate, hiking it up by twice this month.
Tobacco excise taxes, which were increased in January, were another relevant driver for consumer prices in Georgia. Not only did the ad valorem excise increase from 10% to 30% as of January, all tobacco products are now charged the excise previously only charged on filtered cigarettes (non-filtered cigarettes were charged a lower excise in the past). The price of domestically produced non-filtered cigarettes doubled on the year while the price of filtered cigarettes (local or foreign) surged by nearly 30%. The tobacco excise charged in Georgia is €0.56 per 20-cigarette pack, versus the €1.8 target set for 2024 under Tbilisi’s agreements with the European Union.
18​ GEORGIA Country Report​ October 2019 ​ ​www.intellinews.com