ISET

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This week, ISET’s Khacahpuri Index team checked whether average hourly wages in different Georgian locations cover the cost of one standard portion of Imeretian khachapuri. Using the cost of khachapuri ingredients in four major Georgian cities (Tbilisi, Telavi, Kutaisi and Batumi) and the latest available data for average monthly wages in the corresponding regions, we calculated that one hour of work would not always suffice to treat you to a portion of delicious Imeretian khachapuri. As we show below, one hour of work can buy you more than one Khachapuri portion in Tbilisi. If you happen to live in Georgia’s periphery, the same one hour of work will buy you only slightly more than half a portion, despite (somewhat) lower prices for khachapuri ingredients.

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Based on February data from three open bazaars in Tbilisi, the average cost of cooking one standard portion of Imeretian khachapuri stood at GEL3.47. Someone opting for the convenience of shopping in one of Tbilisi’s major supermarket chains, such as Carrefour, Fresco, Spar or Goodwill, paid 4.40GEL (representing a premium of about 28%) for cooking exactly the same khachapuri. Modern retail outlets definitely offer many advantages for Georgia’s middle class shoppers: an excellent selection of products, air conditioned space, parking, etc. Yet, these advantages come at a cost.

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In February 2016, the average cost of cooking one standard Imeretian khachapuri declined to 3.44 GEL, which is 4.3% lower month-on-month (that is compared to January 2016), and 4.7% higher year-on-year (compared to February 2015).
The monthly (negative) change in the Index follows the traditional seasonal trend in fresh milk production, which gradually resumes in January and February. The annual increase, however, reflects an uptick in price inflation.

Practically all khachapuri ingredients (with the exception of flour, which dropped 1.6% y/y) went up in price compared to last year: cheese (up 4.9%), eggs (2.7%), milk (10%), butter (15%) and yeast (9.3%). These increases are very much in line with the official estimate of annual inflation by GeoStat, currently standing at 5.6%.

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Established almost eight years ago, ISET Policy Institute’s Khachapuri Index was inspired by the famous Big Mac Index of The Economist. The Big Mac Index ranks countries on the cost – translated into US dollars – of the Big Mac hamburger sold at local McDonald's restaurants. We rank Georgia’s major cities on the cost of cooking one portion of Imeretian Khachapuri.
The whole point about the Big Mac Index is that McDonald’s hamburgers are exactly identical regardless of whether they are produced in Georgia, China or the US. They consist of exactly the same ingredients. Moreover, they are produced and sold by workers with roughly the same qualifications. Finally, McDonald’s restaurants use very similar buildings and identical equipment all over the world.

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