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The average cost of cooking one standard Imeretian Khachapuri in October 2014 was 3.35 GEL, 0.1% lower both in month-on-month comparison (m/m, that is compared to the previous month) and year-on-year comparison (y/y, that is compared to the same month of last year).

While there was almost no price change, because many ingredients prices show seasonality – but both one month and one year ago, there was autumn. To illustrate seasonality, let us have a closer look at the price of cheese. The average price is highest (around 9 GEL per kilo) in the winter period, and lowest (around 5 GEL) in the summer period (see the graph). These changes are in turn best explained by the seasonality of one of the cheese’s main ingredients, fresh milk. Yet surprisingly, the price of milk, which you can buy in open markets or in supermarkets, does not follow the same seasonal path. The milk price seems to follow a different pattern than seasonal changes. How can that be? Does all this make sense?

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The average cost of cooking one standard Imeretian Khachapuri in October 2014 was 3.35 GEL, which is 0.1% lower both month-on-month (m/m, that is compared to the previous month), and year-on-year (y/y, that is compared to the same month of last year).Foreign currency earners have been affected differentially, depending on whether they are earning their income in USD or EUR.GEL depreciated relative to the USD: the average GEL/USD exchange rate in October 2014 was 1.75, which is 0.01 points higher m/m and 0.08 points higher y/y. As a result, when expressed in USD, Khachapuri Index lost -0.6% m/m and -5.2% y/y.Conversely, GEL appreciated relative to EUR, with the average GEL/EUR exchange rate in October reaching 2.22, which is 0.04 points lower m/m. and 0.05 lower y/y. For those earning their income in EUR, khachapuri price gained 1.3% compared to the previous month and 2% compared to the same month of last year.

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After consistent increases in two previous months, the average cost of cooking one standard Imeretian khachapuri stayed at 3.35 GEL in October 2014, unexpectedly bringing the Khachapuri Index to a halt. The Index dropped 0.1 % month-on-month (compared to September 2014) and year-on-year (compared to October 2013).

There was quite a bit of regional variation in the Khachapuri Index dynamics. The Index lost 1.8 % and 1.2% in Tbilisi and Kutaisi, respectively; Batumi experienced the largest decline (-6.5%) at the end of the tourism season. The only city preserving the usual upward trend of the Index is Telavi (up by 9.9%). The price variation between the most expensive (Kutaisi) and the cheapest (Batumi) cities reached 0.42 GEL.

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The average cost of cooking one standard Imeretian Khachapuri in November 2014 was 3.34 GEL, which is 0.2% lower month-on-month (m/m, that is compared to the previous month), and 2.4% lower year-on-year (y/y, that is compared to the same month of last year). However, Khachapuri became even cheaper for foreign currency earners because of a sudden GEL depreciation (m/m and y/y) relative to USD and EUR during the last two weeks of November.By the end of November, the GEL/USD exchange rate reached 1.83, which is 0.09 points higher m/m and 0.16 points higher y/y. Through this double effect (a seasonal decrease in Kh-Index and devaluation of the local currency), the Khachapuri price expressed in USD lost 4.7% m/m and 10.8% y/y.The situation is roughly similar when looking at the Euro price of khachapuri. With the exchange rate reaching 2.29GEL/EUR, the price of khachapuri, expressed in Euro, is down by 3.0% m/m, and 3.4% y/y.If we take a simple average of the USD and Euro exchange rates, the Khachapuri Index for foreign currency earners is down by -3.8% m/m and -6.7% y/y.

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