Page 15 - GEORptFeb20

4.2​ Inflation 4.2.1​ CPI dynamics
Georgia’s inflation eases to 6.4% y/y in January
Georgia’s consumer prices increased by 0.7% in January, while the annual inflation rate eased to 6.4% in the month from 7.0% y/y in December, national statistics office Geostat reported.
In an interview with Business Media Group (BMG), vice-president of the Georgian central bank Archil Mestvirishvili said that there would be easing from the 9% key rate currently—a figure that compares to the 6.5% that held sway last summer—only after lending and growth rates no longer posed inflationary pressure.
“According to the information available today, we believe that tightening is sufficient. We wait until new information comes out, keep it at 9% for a while and then we will start to gradually reduce it. The inflation rate should start gradually reducing as well,”Mestvirishvili added.
The drop in inflation was mainly an effect of the one-off impacts of tobacco excise duties being phased out one year after they pushed up inflation by 0.7pp to 2.2% y/y. The prices of food, non-alcoholic and alcoholic beverages keep rising at double-digit rates, however, maintaining inflation at an elevated level.
The 11.3% average rise in food prices contributed 3.57pp to the 6.4% y/y inflation rate in January while the 11.2% y/y rise in alcoholic beverage and tobacco prices contributed 0.76pp. The prices of tobacco products still increased by 20% y/y, bjut this was a significant slowdown from the 30% y/y seen in December—and the decrease expected for coming months will also push down inflation.
According to Geostat, monthly inflation calculated without tobacco amounted to 0.6% m/m, while the annual inflation rate calculated after filtering out the effect of tobacco was 5.9%.
15​ GEORGIA Country Report​ February 2020 ​ ​www.intellinews.com