The National Statistics Office of Georgia, GEOSTAT, has published a report on the inflation rate in Georgia for June 2021. The report shows that the Consumer Price Index in the country has increased by 0.7 percent compared to the previous month.
Inflation to 9.9%, Economy Minister cites imported products as the reason
By Nika Gamtsemlidze
Monday, July 5
As for the annual inflation rate, the GEOSTAT report shows that it has amounted to 9.9 percent in June. The report also indicates the changes in annual core inflation. As the report shows, prices in the country have increased by 5.9 percent. As for the annual core inflation without tobacco, it is 5.8 percent. The biggest contributors to the changes were housing, water, electricity, gas, and other fuels, as well as food and non-alcoholic beverages, and recreation and culture.
Georgian Economy Minister Natia Turnava spoke to reporters on July 4 about rising prices and inflation, calling it a “serious challenge.” According to the Minister of Economy and Sustainable Development, the main cause of inflation was imported products.
According to Natia Turnava, the reason for the increase in prices for imported products was the depreciation of the Georgian Lari and the increasing prices around the world in general.
Speaking about the depreciation of the Lari, the Minister of Economy said that “the problem has been more or less eliminated” and that “the price increase for imported goods will decrease by the end of the year.”
Speaking about the increase in prices on the world market, Natia Turnava noted that Georgia is launching a new program to replace imports and will try to encourage local production through special programs - grants and subsidies. “Wherever we have the potential to produce ourselves and reduce imported goods in our market, this is exactly what will happen,” Natia Turnava said.
Inflation is one of the main challenges for the Georgian economy today. A report has been released showing that inflation, which had already risen to 7.7%, rose even further in June to 9.9%. Georgia has not had such high inflation in the last 10 years.
In Georgia, the National Bank is responsible for the overall level of prices, and to achieve this goal, the NBG uses the inflation targeting regime, for which it increases or decreases the refinancing loan rate as needed. By 2021, the NBG target inflation was 3%, so the current inflation rate is exactly 3.3 times higher than the target.