Why do prices of goods change in Georgia?
Electricity, gas and water costs up 3.7% in January 2016
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The Producer Price Index (PPI), that measures price changes of a basket of goods and services sold by manufacturers in the wholesale market, is increasing month-on-month in Georgia.
The PPI is used as an indicator of rate of inflation or deflation. If the Consumer Price Index (CPI) measures price changes from a consumer’s perspective, PPI measures them from the seller’s perspective.
Today, the National Statistics Office of Georgia, Geostat, published data that showed in January 2016 the PPI for industrial products increased 0.2 percent over December 2015. This was a 4.1 percent rise compared to January 2015 and 77.4 percent higher than the 2005 average.
The reason the PPI increased in January was mainly driven by a 3.7 percent price increase in electricity, gas and water costs, which had an upward effect of 0.48 percentage points on the overall monthly index change.
Lower prices were recorded for mining and quarrying (-4.6 percent) and manufacturing (-0.2 percent). Prices fell six percent for manufacture of basic metals and fabricated metal products and increased 11.6 percent for manufacture of chemical products.
The annual PPI rate was mainly affected by price changes for the following sections:
- Supply of electricity, gas and water: Prices increased 19 percent and contributed 2.51 percentage points to the overall index change; and
- Manufacturing: Prices were 2.1 percent higher and this section contributed 1.73 percentage points to the overall index change. Prices rose for manufacture of food products, beverages and tobacco products (4.6 percent) and manufacture of chemical products (20.1 percent).
Geostat said prices also fell for manufacture of basic metals and fabricated metal products (-16.9 percent).
The Producer Price Index (PPI) for industrial products is decreasing month-on-month in Georgia, while it is on rise year-on-year (y/y).
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