April 2021: annual inflation rate amounts to 7.2%

In April 2021 the consumer price index increased by 0.9% compared to the previous month, while the annual inflation rate amounted to 7.2%, according to the latest inflation data from the National Statistics Office of Georgia (Geostat).

"With regard to the annual core inflation prices increased by 6.9%, while the annual core inflation without tobacco amounted to 6.8%", said Geostat.

The monthly inflation rate was mainly influenced by price changes for the following groups:

• Transport (+3%)
• Clothing and footwear (+4.9%)
• Furnishings, household equipment and maintenance (+2.1%)
• Food and non-alcoholic beverages (+0.3%)

As for annual inflation, prices increased in the group of restaurants and hotels (+15%), health (+13.8%), transport (+12.4%), housing, water, electricity, gas and other fuels (7.1%) and food and non-alcoholic beverages (+3%). 

The National Bank of Georgia (NBG) explained that the reduction of inflation since last December was related to the subsidisation of utility fees but when the subsidy ended last month it caused the upward shift of inflation. 

In view of prolonged deviation of inflation from its target and intensified inflationary pressures, the NBG decided to increase the monetary policy rate by 1 percentage point... Given the changed circumstances since the previous meeting inflation will average around 6.5% in 2021 and then gradually approach the target. The forecast for economic growth is about 4% in the baseline scenario", says the NBG.

The central bank said that pressure on inflation is mainly coming from rising prices on international commodity markets and the high dollarisation of the economy, which also carries risks of financial stability.