The National Bank of Georgia (NBG) has released its 2024 inflation report, revealing that inflation continues to remain below the target level. The annual inflation rate has decreased to 0.6% in September, a significant drop attributed to low inflation rates for local production and reduced import inflation. This report provides a comprehensive overview of the current economic conditions and the factors influencing inflation in Georgia. The findings highlight the effectiveness of monetary policies and the stability of the Georgian economy.
Key Findings of the Report
The NBG’s report indicates that core inflation, which excludes volatile items such as food, energy, and cigarettes, stands at 0.8%. This figure reflects the underlying inflation trend and provides a clearer picture of the long-term inflationary pressures. The monthly price level change showed a modest increase of 0.3% compared to August 2024, indicating a stable economic environment.
One of the notable aspects of the report is the seasonal impact on prices. For instance, there was a 0.2% price increase in Imeretian cheese, while apples, grapes, cucumbers, and tomatoes collectively saw a 0.2% decrease. These fluctuations are typical in agricultural products and are influenced by seasonal supply and demand dynamics.
The report also highlights changes in gasoline prices, which have increased by 7.2% compared to September 2023. This rise contributed 0.3% to the overall inflation rate. Despite this increase, the overall inflation remains low, suggesting that other factors are helping to offset the impact of higher fuel prices.
Impact on the Economy
The low inflation rate has several positive implications for the Georgian economy. It indicates that the cost of living is relatively stable, which is beneficial for consumers. Lower inflation also helps to maintain the purchasing power of the Georgian Lari, making it easier for households to manage their expenses. Additionally, stable prices can encourage investment and economic growth, as businesses can plan with greater certainty.
The report also sheds light on the impact of tariffs on inflation. Internet tariffs saw a reduction of 1.7%, while electricity tariffs decreased by 0.3%. These reductions contributed 0.4% and 0.3% to the overall inflation rate, respectively. Lower utility costs can have a significant positive impact on households, reducing their monthly expenses and freeing up income for other uses.
Food prices, which are a major component of the inflation basket, showed an overall decrease of 0.8% compared to September 2023. This decline contributed 0.2% to the inflation rate. The reduction in food prices is particularly important for low-income households, as it helps to alleviate some of the financial pressures they face.
Future Outlook
Looking ahead, the NBG’s report suggests that inflation is likely to remain low in the near term. The central bank’s monetary policies have been effective in maintaining price stability, and the current economic conditions support a continued low inflation environment. However, the report also cautions that external factors, such as global commodity prices and geopolitical developments, could influence future inflation trends.
The NBG will continue to monitor the economic situation closely and adjust its policies as needed to ensure that inflation remains within the target range. The central bank’s commitment to price stability is crucial for maintaining economic confidence and supporting sustainable growth.
The NBG’s 2024 inflation report provides a detailed analysis of the current inflationary trends in Georgia. The findings highlight the effectiveness of monetary policies and the stability of the economy. With inflation remaining below the target level, the outlook for the Georgian economy is positive, although vigilance is required to manage potential risks.
