April 2015: CPI and Khachapuri Index Diverge

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The FINANCIAL — In April, the average cost of cooking one standard Imeretian khachapuri fell to 2.96 GEL, which is 3.2% lower month-on-month (m/m, that is compared to March 2015), and 11.4% lower year-on-year (y/y, that is compared to April 2014).

The main contributors to y/y Khachapuri Index deflation were cheese (down 22.3%) and eggs (2.5%). Not incidentally, both Imeretian cheese and eggs are produced in Georgia. Prices of other (mostly imported) ingredients increased: yeast (up 14.2%), flour (5.2%), milk (2%) and butter (0.8%).

Not surprisingly, the Khachapuri Index is hardly representative of the broader price dynamics in Georgia, as measured by the official Consumer Price Index (CPI). In April 2015, the CPI increased both m/m (up 0.3%) and y/y (2.5%). Annual (y/y) CPI inflation was mostly driven by price increases in such categories as “alcoholic beverages and tobacco” (up 11%), “health” (6.4%), “furnishing, household equipment and routine house maintenance” (5.7%) and “education” (3%). Prices decreased in the “clothing and footwear” (-5.1%) and “transport” (-5.1%) categories.

 

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