Retail FPI | Looking for Answers to Rising Beef Prices

Mid-December, food prices maintained an upward trend, as ISET’s Retail Food Price Index increased by 2.2%, compared to mid-November 2017. It turns out that the holidays will cost more in 2017 compared to December 2016, as we recorded a significant 10.9% y/y increase in food prices. According to data from the first two weeks of December, prices increased the most for eggplant (105%), cucumbers (43%), and onions (20%). However, not all food items became more expensive. The largest price drops were observed for carrots (14%), eggs (5%), and potatoes (3%).

MORE ON BEEF PRICE HIKE

From an annual perspective, beef prices were particularly notable. Beginning in September 2017, beef has been trading above last year’s prices. In December, the average price of 1 kg of beef is 13.10 GEL; that is 17% higher compared to the previous year (11.17 GEL/KG).

High beef prices might be caused by the increased export of live bovine animals. During January-October 2017, Georgia’s exports in this category increased by 8%, compared to the same period in the previous year. Therefore, the value of Georgia’s exports in this category has also increased. During January-October 2017, the export value of live bovine animals accounted for 32,404.5 thousand USD; that is 57% higher than the same indicator for the previous year (unfortunately, export figures for November – December 2017 are not yet available). The increased export of live animals reduced the supply of meat to the local market, causing prices for beef to rise. While increased exports is good news for beef producers, Georgian consumers might not be very happy, since once beef is scarcer, it might become even more expensive. However, in the long run, if the new producers emerge in the market, supply will increase and meat prices are likely to return to their previous levels.