NBG: Inflation in Georgia will peak in Q1 2016

Inflation in Georgia will reach its peak in the first quarter of 2016 and will return to the target rate from the second quarter, says National Bank of Georgia (NBG) president Giorgi Kadagidze.

In order to avoid further inflation, the bank could again increase its refinancing rate "if we see the need for tightening the monetary policy,” said Kadagidze.

The last time the bank’s Monetary Policy Committee (MPC) increased the refinancing rate was at the beginning of November. At the time the MPC increased the refinancing rate by 50 basis points to 7.5 percent.

As for inflation, latest figures from the National Statistics Office of Georgia (Geostat) said the country’s monthly inflation rate was slightly dropping while the annual inflation rate was on the rise following price changes to several major commodities in the consumer basket.

Geostat noted monthly inflation in November 2015 reached 0.3 percent (down from 0.8 percent in October) while annual inflation equalled 6.3 percent (up from 5.8 percent in October).

The NBG president believed annual inflation would drop and remain at its three percent target.

Kadagidze also commented on the recent fall of Georgia’s national currency, the Lari against the US dollar and Euro. He noted the main economic shock had already been reflected on the national currency and he did not expect many further changes.

"As I have mentioned many times earlier, we do not expect any pressure in terms of the GEL depreciation,” Kadagidze concluded.