Page 16 - GEORptMay18

4.2 Inflation
4.2.1 CPI dynamics
Georgia’s consumer price inflation levels off at 2.8% y/y in March
Georgia's annual consumer price inflation (CPI) remained stable at 2.8% y/y in March, on a par with the 2.7% y/y registered in February. The numbers are the lowest recorded monthly CPI levels seen in Georgia since December 2016.
Just like its major trade partners Turkey and Azerbaijan, Georgia has struggled with monetary depreciation in recent years. The country's central bank sought to defend its gross international reserves and allowed the currency to depreciate by as much as 40% in 2015-2016, attracting the government's criticism.
Since then, the Georgian lari's exchange rate has varied widely, undergoing lengthy depreciations in 2017 (particularly in the October-December period) whenever consumers became spooked and rushed to swap their laris for foreign exchange.
March's inflation levels are well within the government's target rate of 5% for 2018. On a monthly basis, the CPI contracted by 0.4%.
The most important contributors to annual inflation were a 1.2% y/y rise in food prices, followed by a 0.4% y/y increase in alcoholic beverage prices, and a 0.4% y/y rise in the cost of housing, water and electricity.
4.2.2 PPI dynamic
Georgia’s industrial PPI up 6.5% y/y in March
Georgia’s Producer Price Index (PPI) for industrial products recorded a robust 6.5% y/y advance in March, despite falling 0.9% in monthly terms, data from statistics office Geostat showed.
The growth was driven by a 5.5% annual increase in the manufacturing
16 GEORGIA Country Report May 2018 www.intellinews.com