September Retail FPI | Food Prices on the Rise
In the middle of September, food prices increased by 12% y/y (that is, compared to September 2016).
On an annual basis, the biggest price increases happened for apple (87%), potato (46%) and carrots (42%), whereas cucumber, peach and tomato, on the contrary, became cheaper by 25%, 20% and 14% respectively.
The majority of food products in the basket became more expensive y/y, leading to an overall increase of 12% in food prices offered by the largest supermarkets in Tbilisi. This finding is in line with GeoStat’s data which confirms an increasing trend in food prices and shows that major drivers of increase are fruits, vegetables and dairy products.
Since seasonality is not contributing to the yearly changes, one has to look for other reasons that can explain such a big increase in food prices. Given increasing trends in the number of tourists willing to explore Georgia, increased demand from tourists can be a possible explanation for the higher food prices.
According to the latest data from the Georgian National Tourism Administration (GNTA), in August, the number of international arrivals in Georgia amounted to 1,080,449, representing a 27.4% increase over the same period of 2016. Of the total number of visits, 573,368 lasted longer than 24 hours which corresponds to an annual increase of 27.2%.
Prices may stabilize by the end of September as vacations are over and everybody gets back to work and school.