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The average cost of cooking one standard Imeretian Khachapuri in May 2018 stood at 3.17 GEL, which is 3.4% lower month-on-month (i.e. compared to April 2018). The Khachapuri Index is actually up by 1.1% year-on-year (compared to May 2017), suggesting a slight uptick in annual inflation. The supply of fresh milk is approaching its seasonal peak, and this peak might be earlier than usual this year because of the early spring.
The price of khachapuri has been declining in a continuous manner since January 2018. The cheapest city remains Kutaisi, with an average of 2.90 GEL for one standard Imeretian khachapuri. However, as we predicted in our previous publication, the price decrease in Kutaisi has been transmitted to other cities in Georgia. The largest monthly decrease was observed in Tbilisi, where the Index declined by 7.6% compared to last month. In Telavi, the index went down by 1.4%, and in Batumi, by 3.8%, compared to April 2018.
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The average cost of cooking one standard Imeretian khachapuri in April 2018 across Georgian cities varied, from 2.90 GEL (the lowest price, observed in Kutaisi), to 3.60 GEL (the highest price, observed in Tbilisi). The price difference between Kutaisi and Tbilisi amounted 0.70 GEL, which is one of the highest differentials we have ever observed between these cities. The overall average price was 3.29 GEL, which is 7.4% lower compared to the previous month (March 2018), and 1.0% lower compared to same month last year (April 2017).
As shown on the graph, year-on-year prices were consistently higher in 2017-2018, compared to 2016-2017 prices, until April, 2018. April is the first month in above-mentioned time period when we observe deflation compared to last year. The main contributors to y/y Khachapuri Index deflation were cheese (down 0.9%) and flour (down 4.2%). The price of cheese dropped dramatically (down by 32.9% m/m) in Kutaisi, compared to other cities.
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The Khachapuri Index kept declining in April, 2018, very much in line with the seasonal trend we observe every year. The average cost of cooking one standard Imeretian khachapuri currently stands at 3.28 GEL, which is 7.4% lower month-on-month (that is, compared to March 2018), and 1% lower year-on-year (that is, compared to April 2017). The main driver of the Index is Imeretian cheese, consequently, the monthly and yearly decrease is associated with the price of cheese, which declined by 13.5 %( m/m) and 0.9 %( y/y) in April 2018.
The price of cheese directly depends on the amount of milk produced and its price. Georgian milk prices exhibit high seasonal volatility, mainly related to structural inefficiencies in the country’s dairy production. Poorly planned calving periods (for most cows, in the winter months) limits the milk supply in winter, which in turn sharply increases milk prices during the winter months.
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In April 2018, the average cost of cooking one standard Imeretian khachapuri declined to 3.29 GEL, which is 7.4% lower month-on-month (that is, compared to March 2018), and 1.0% lower year-on-year (compared to April 2017).
The Khachapuri Index has dropped for all cities in Georgia in April 2018, compared to last month (March 2018). This decreasing trend of Index for all cities has been observed since January 2018. The price decline was greatest in Kutaisi. In April 2018, the average cost of cooking Khachapuri is 2.9 GEL in Kutaisi, which is 17.8% lower compared to March 2018. Moreover, the average Khachapuri Index for all cities is 14% higher than the Index for Kutaisi.
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