ISET

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In January, the average cost of cooking one standard Imeretian Khachapuri dropped to 3.40 GEL, which is 7.4% lower month-on-month (m/m, that is compared to the previous month), and 5% lower year-on-year (y/y, that is compared to the same month of last year).

The only one contributor to y/y deflation was the main component of the Khachapuri recipe - cheese (-13.8%) (see graph), while the prices of other components showed have increased: flour (+16.6%), milk (+5.4%), yeast (+7.6%), butter (+11.3%), and eggs (+1.3%).

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The average cost of cooking one standard Imeretian Khachapuri in the first month of 2015 dropped to 3.40 GEL, which is 7.4% lower month-on-month (m/m, that is compared to the previous month), and 5% year-on-year (y/y, that is compared to the same month of last year).

Such a sharp decline of the Kh-Index is related to the record low Georgian consumer sentiment. In January 2015, ISET's Consumer Confidence Index (CCI) reached a new minimum of -25.8 points (down by 3.3 points from December) reflecting four consecutive months of Georgian Lari (GEL) devaluation against USD (see chart), and a sharp decline in remittances.

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The average cost of cooking one standard Imeretian Khachapuri reached 3.68 GEL in December 2014. The price jumped up by 9.5 % month-on-month (compared to November 2014) and by 2.4% year-on-year (compared to December 2013).

The highest monthly increase of 15.9% in December 2014 rewarded Kutaisi with the title "The most expensive Khachapuri City", where prices stood at 3.87 GEL. Tbilisi took second place (3.68 GEL) after an increase of only 4.7%. Batumi followed Tbilisi very closely (3.61 GEL) with an increase of 9.9%. Telavi occurred to be the cheapest city (3.48 GEL) in December with a 7.7% change in monthly terms. The price variation between the most expensive city (Kutaisi) and the cheapest one (Telavi) reached 0.39 GEL.

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In December 2014, Khachapuri Index returned to its upward seasonal trend and reached 3.66GEL. This is 9.4% higher compared to the previous month (November 2014) and 2.4% higher compared to December 2013 (y/y). The main contributors to y/y Khachapuri Index inflation were flour (16.4%), milk (7.2%), yeast (5.1%), butter (3.2%) and cheese (0.7%), while the price of eggs dropped (-6.4%).

Recent Khachapuri Index dynamics are consistent with GeoStat-reported general Consumer Price Inflation (CPI), which also increased in December by 0.7% in monthly terms and 2% y/y. CPI inflation was mostly driven by price increases in such categories as health (up by 6.7%), furnishing, household equipment and routine maintenance of the house (4%), restaurants and hotels (3.9%), food and non-alcoholic beverages and alcoholic beverages and tobacco (2.5%). It is worth noting that, for much of 2014, prices in the clothing and footwear category have, on average, remained about 5.5% below their previous year level.

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