Georgia’s Annual Inflation Reaches Record 12.8% In October
By Natalia Kochiashvili
Friday, November 5
The National Statistics Office of Georgia (Geostat) published a report according to which in October the consumer price index in Georgia increased by 12.9% compared to the previous year. The biggest impact on the formation of inflation was the 18% increase in food prices, as well as the rise in fuel prices, which led to higher prices in the transport group. 12.8% is a record high inflation in Georgia during the last 10 years.
According to individual groups, the increase in prices is as follows:
In the group of food and non-alcoholic beverages prices increased by 18.4%, which was reflected in 5.73% of annual inflation. Prices increased for the following subgroups: vegetables and horticulture (43%), oil and fat (31.6%), bread and bakery products (19.4%), milk, cheese and eggs (18.2%), sugar, jam, and other sweets (18%), Fish (16%), mineral and spring water, non-alcoholic beverages and natural juices (13%), meat and meat products (11.2%), fruits and grapes (9.3%), coffee, tea and cocoa (6.4%);
Prices in the transport group increased by 19.6%, which was reflected in the growth of the overall index by 2.4%. Prices increased for the operation of personal vehicles (28.9%) and transport services (2.8%). At the same time, prices decreased for the purchase of vehicles (-1.3%);
Housing, water, electricity, gas: The group recorded an 11.9% increase in prices, which was reflected in annual inflation by 1.75%. Prices increased for the subgroups: electricity, gas, and other fuels (13.9%), ongoing maintenance and repair of housing (7.3%), water supply, and other housing-related services (4.5%);
Prices in healthcare increased by 8.4%. Accordingly, the group’s contribution to the annual index was 0.65%. Prices increased for the subgroups of medical products, apparatus, and equipment (12.7%), hospital services (5.3%), and outpatient services (3.6%).
Maia Makharashvili, head of the Khechinashvili Clinic, says medical services have not become more expensive with them, but the increase in prices has affected basic equipment purchased in other countries in foreign currency, especially given the depreciation of Lari and higher costs of transportation.
In this background, it’s important that in October, according to the data provided by the Social Service Agency, the number of recipients of subsistence allowance increased to 633 586, which constitutes 17% of the population.
Compared to September, the number of recipients of social benefits has increased by 5,430 people. 129,311 people receive an allowance in Tbilisi, which is the highest number in the country. Capital is followed by Imereti, where 82,216 people receive social benefits. Kvemo Kartli is in third place with 75 842 allowance recipients.
According to the agency, the amount transferred to the families receiving subsistence allowance in October amounted to GEL43,377,707. Compared to September, the amount increased by GEL 236,685.
According to the Ministry of Health, based on the government's decree of May 23, 2020, the social status of the families on the list of beneficiaries is not regularly checked, unless requested by the family. Consequently, individuals who have previously received assistance, despite a possible change in their social status, continue to receive assistance.
Georgia’s economy is highly dependent on remittances. In January-September 2021, a record amount of remittances, $ 1.7 billion, was transferred to Georgia, which is 28% more than the previous year. According to the National Bank, Georgia received the most money from the Russian Federation, which amounted to $ 301 million in the first nine months of 2021. Italy comes next with $ 282.7 million, the USA is in 3rd place with $ 210 million, and Greece is 4th with $ 181.5 million.
According to the World Bank, Georgia ranks 2st in the world in terms of remittances. 13.3% of the country's economy is generated by remittances sent by Georgian citizens working abroad. Without these funds, the size of the country's local demand would have been much smaller. World Bank statistics are based on 2020 data, when Georgia received $ 1.88 billion in remittances, while net remittances amounted to $ 1.55 billion.
World Bank statistics show that the share of remittances is highest in low-income countries. In the first place in this regard is Tonga, whose 37% of GDP is filled by remittances. Second comes Tajikistan (28.6% of GDP), whose significant part of the population is employed in Russia and other CIS countries. Like Georgia, more than 10% of the economy in Ukraine and Armenia depends on remittances.
