Page 18 - GEORptAug20
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4.2 Inflation 4.2.1 CPI dynamics
Inflation in Georgia eases to 6.1% in June
Georgia’s annual inflation eased to 6.1% in June 2020, down from 6.4% in May and 6.9% y/y in April, opening the door for policy rate cuts. Prices decreased by 1.4% in the month, the statistics office announced.
On June 24, Georgia’s central bank the National Bank of Georgia (NBG) operated a cautious 25bp cut in the policy rate to 8.25%.
The annual inflation rate was driven by the 13.6% y/y rise in the prices of food and beverages (which contributed 4.15pp to the overall inflation) and 7.5% increase in the prices of health services (+0.61pp) while the 8.6% annual decrease in the price of transport services made a negative 1.08pp contribution.
The central bank said that according to its forecast the inflation would continue to gradually decline over the rest of the year, reaching the 3% target level in the first half of 2021.
“On the one hand, the COVID-19 prevention measures led to an increase in the cost of the supply of some goods and services. However, the increase in costs has only a short-term effect on the inflation rate. On the other hand, the impact of significantly weaker external and domestic demand on inflation will last longer, leading to a reduction in inflation forecasts,” said the NBG
18 GEORGIA Country Report August 2020 www.intellinews.com
