Page 17 - GEORptDec20

4.2​ Inflation 4.2.1​ CPI dynamics
Easing inflation opens door to more rate cuts in Georgia
As expected, annual inflation continued to decline, reaching 4.8% in August, the central bank said in comments put out with the monetary policy decision. ​According to the current forecast, other things being equal, the NBG expects that the downward trend of inflation will continue over the rest of the year, and that the inflation rate will fall below the 3% target level in the first half of 2021 and then approach it from below.
Georgia’s inflation rate eased for the third month in a row to 5.7% y/y in July from 6.9% y/y in April, after consumer prices decreased in monthly terms for the second straight month, with the reduction 0.5% m/m in July, national statistics office Geostat announced.
The last monetary policy move was a moderate 25bp rate cut on June 24, taking the key rate to 8.25%, but the inflation figures confirming the central bank’s forecast open the door for another rate cut, something that bodes well for a much-needed economic recovery..
4.2.2​ PPI dynamic
Georgia’s PPI for industrial products up 6.7% y/y in February
Georgia’s Producer Price Index (PPI) for industrial products increased by 6.7% y/y in February this year, after a 7.1% and 7.8% y/y rise in January and December, respectively, according to the national statistics office.
It was the lowest producer inflation since June last year as cost decreased for manufacturing, electricity, gas, steam and air conditioning supply and mining. On a monthly basis, producer prices decreased by 0.3% in February.
17​ GEORGIA Country Report ​December 2020 ​ ​www.intellinews.com