In September 2016, the average price of cooking one Imeretian khachapuri stood at 3.43 GEL. Compared to the previous month (August 2016) the Khachapuri Index gained 8.6%. The upward trend in Index at this time of the year is mostly related to the seasonal increase in the price of cheese (due to dwindling supply of fresh milk).
While going up in monthly terms, the Index actually dropped 0.8% compared to the same time of last year (y/y). As shown in the chart, the main contributors to Khachapuri Index annual deflation were eggs (-7%) and cheese (-3%). All other ingredients increased in price: milk (1%), flour (2%), yeast (9%), and butter (17%). Interestingly, prices fell y/y for locally produced goods (eggs and cheese); prices went up for goods that are imported (yeast and butter) or use imported intermediate inputs in their production (flour and milk).
This time we can’t blame the increase in the price of imported items on the exchange rate of the GEL. If anything, the GEL slightly appreciated relative to the USD: in September 2015, the GEL/USD exchange rate stood at 2.31, which is 0.1 points below its rate in September 2016.
A possible explanation has to do with the general increase in prices of agricultural commodities compared to last year. Global food prices added 7% y/y, with increases in most food categories, except a few items, such as wheat.
WHAT’S WRONG WITH GEORGIA’S FLOUR PRICES?
The story of wheat and flour prices is an interesting one. This year’s wheat production in the United States, the European Union, and Russia reached record levels. As a result, wheat stocks went up, and prices went down by a whopping 24%. Now, the lion’s share of flour sold in the Georgian market is milled from imported wheat, and yet domestic flour prices remain some 2% above their last year’s level. What’s going on?
According to a recent APRC study, it takes up to 7 months for Georgian flour prices to fully adjust to changes in global wheat prices. Several factors appear to hinder “price transmission”: high transportation costs, market structure (monopolistic bottlenecks in some segment of the value chain), and available storage space (and stocks).
The good news is that flour prices did decline in monthly terms (down 4% since August). If continued, this trend will allow Georgian consumers to more fully benefit from record wheat production levels and low prices.
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In June 2021, the average price of cooking one Imeretian khachapuri stood at 4.28 GEL. Compared to the previous month (May 2021) the Khachapuri Index lost 1.1%. In annual terms (compared to June 2020), however, the index added 8.8%. The monthly (negative) change in the Index follows the traditional seasonal trend in fresh milk production, which peaks in June and July. In June 2021 price of cheese has decreased by 2.5% compared to the previous… Read More
May, 2021 | Food Prices Stay High
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April, 2021 | Khachapuri Index Increases by 6%
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March, 2021 | Kh-Index Continues to Fall in March 2021
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February, 2021 | Will Wheat Price Increase Further?
In February 2021, the average cost of cooking one standard portion of Imeretian khachapuri stood at 4.69 GEL. This is 3.1% lower MoM (compared to January 2021) and 7.8% higher YoY (in comparison to February of 2020). On a monthly basis, at this time of the year, a downward trend in the index is not unusual, and simply relates to the decreasing price of cheese (due to an increased seasonal supply of fresh milk). Although… Read More
