ISET

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The average cost of cooking one standard Imeretian Khachapuri in May 2015 stood at 2.88 GEL, which is 2.7% lower month-on-month (i.e. compared to April 2015). The Khachapuri Index is actually up by 1% year-on-year (compared to May 2014), suggesting a slight uptick in annual inflation, at least as far khachapuri ingredients are concerned.

If we look at a more comprehensive basket of goods and services, such as used for the official Consumer Price Index (CPI), prices are up in both monthly and annual terms, by 0.6 and 3.5%, respectively.

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In May 2015, the average cost of cooking one standard portion of Imeretian khachapuri reached 2.88 GEL - a 2.7% decrease month-on-month (compared to April 2015). In annual terms (compared to May 2014), however, the Index added 1%.

Driven by the sharp seasonal decline in price of Imeretian cheese - the main khachapuri ingredient, the Index reached its lowest value (2.61 GEL) in Kutaisi, the capital of Imereti. This is hardly incidental as we observe the same pattern every year since launching our survey. Apparently, Imereti sees the largest seasonal spike in the supply of fresh milk, and much of this milk goes into the production of Imeretian cheese and other traditional dairy products, such as matsoni.

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In April, the average cost of cooking one standard Imeretian khachapuri fell to 2.96 GEL, which is 3.2% lower month-on-month (m/m, that is compared to March 2015), and 11.4% lower year-on-year (y/y, that is compared to April 2014). The main contributors to y/y Khachapuri Index deflation were cheese (down 22.3%) and eggs (2.5%). Not incidentally, both Imeretian cheese and eggs are produced in Georgia. Prices of other (mostly imported) ingredients increased: yeast (up 14.2%), flour (5.2%), milk (2%) and butter (0.8%).

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ISET’s Khachapuri Index kept declining in April, very much in line with the multi-year seasonal trend (see chart). The average cost of cooking one standard Imeretian Khachapuri currently stands at 2.96 GEL, which is 3.2% lower month-on-month (m/m, that is compared to March 2015), and 11.4% lower year-on-year (y/y, that is compared to April 2014).

While the national average of Kh-Index took another dip in April, there is a quite a bit of variation in its geographic behavior. First, the Index is much higher in Telavi, Tbilisi, and Batumi (3.15, 3.07 and 3.03 GEL, respectively) relative to Kutaisi (2.64 GEL). The price difference between the cheapest (Kutaisi) and the most expensive (Telavi) locations thus stands at more than 20%, offering a nice arbitrage opportunity! Second, while dropping in Tbilisi (down by 3.7%), Batumi (5.5%) and Kutaisi (7.8%), Kh-Index suddenly turned the other way in Telavi (Kakheti), adding 4.2%. 

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