The FINANCIAL — It is well known that prices differ across cities and regions of every country.
Georgia is no exception to this rule. We calculated the price of Khachapuri for each major city in Georgia and the results are as follows. The most expensive city for Khachapuri lovers is Tbilisi, followed by Batumi, Kutaisi and Telavi. In May 2011, one would have to pay 2.81 GEL for a standard Imeretian Khachapuri in Tbilisi, which is about 11% higher than in Kutaisi (2.52 GEL), the capital of Imereti. The price of Khachapuri is also lower in Batumi (2.68) and Telavi (2.59).
An interesting finding concerns the competitiveness of markets in those four cities. Bargaining appears to be most effective in Telavi and Kutaisi: in these two cities frugal housewives could save 16-17% of the average cost of khachapuri by looking around for the cheapest ingredients. Only 12-13% could be saved this way in Batumi and Tbilisi.
Economics lesson of the week: purchasing power
It is a well known fact that the average monthly income of families in Tbilisi is higher compared to other regions of Georgia. However, the cost of living in Tbilisi is also significantly higher. This is reflected in the prices of real estate, as well as other goods and services. The Khachapuri index for Tbilisi and other cities illustrates this point.
Economists introduced the concept of purchasing power associated with a unit of currency to compare income levels across countries. For instance, Georgia’s per capita income in nominal terms is calculated as total GDP (denominated in USD at the official exchange rate) divided by population size. In 2010, it was roughly equal to USD 2,500. If, however, we consider the higher purchasing power of US dollar in Georgia (i.e. the fact that goods and services are relatively cheaper in Georgia), per capita income of an average Georgian is almost twice higher – USD 4,800.