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Inflation converges to targeted value at end of 2020 in Georgia

Business Materials 28 January 2021 05:01
Inflation converges to targeted value at end of 2020 in Georgia

BAKU, Azerbaijan, Jan.28

By Tamilla Mammadova – Trend:

The annual inflation of consumer prices amounted to 3.8 percent in Georgia in November, which is only slightly higher than the targeted 3 percent, Trend reports via the ISET-PI, a think-tank based at the International School of Economics of Tbilisi State University.

Notably, inflation converged to the targeted value at the end of 2020. Approximately 1.7 percentage points of CPI inflation were related to higher food prices (6 percent annual increase), while tobacco prices contributed 0.3 percentage points (10 percent annual growth).

However, decreased oil prices made a notable negative contribution (0.8 ppts) to the annual inflation measure.

The latter trend is mostly a reflection of significantly weakened oil prices on the global market (Euro Brent Spot Price (COP) decreased by 32.5 percent yearly). Meanwhile, the measure of core inflation amounted to 4.8 percent. Overall, CPI related variables had a positive contribution to the GDP forecast.

In addition, the Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on December 9, 2020, and decided to keep its Policy Rate unchanged at 8 percent.

The committee has taken into consideration dynamic of the annual inflation, weak aggregate demand due to health crisis, expected increase of pandemic-related fiscal measures for social and economic support, increased production costs due to additional restrictions in the wake of the pandemic, and high dollarization of the economy.

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