Low inflation a reflection of economic recession

Official information shows that the April inflation rate was 1.8%. Last April it was 12.2%. In March 2009 it was 1.6%., the lowest inflation since 2000.

Some economic analysts suggest that the low inflation figure indicates that the economy has declined and consequently the purchasing power of the population has fallen. This indicates that Georgia is in recession. The Government reckons that the annual inflation rate in 2009 will be 9%, a level being achieved so far.

Different factors have created this low inflation. Bank loans have become much more difficult to get, the fiscal policy of the country has dampened inflationary pressures and there is an overall tendency of price reductions due to the world financial crisis. Economist Demur Giorkehlidze thinks that due to the economic situation and unemployment less money is circulating and therefore prices are going down.