The price of the consumer basket in Georgia has been steadily increasing, despite the relatively low official core inflation rate. The National Statistics Office of Georgia (Geostat) recorded a 1.2% inflation rate. However, an analysis of the ‘consumer basket’ over the past year, 2024, shows that the prices of many essential products and services have increased by 60%.
The price hikes have mainly affected food products and services, particularly garlic (68.7%), kiwi (51.7%), and lemons (30.8%). In the service sector, the prices of airline tickets (28%) and [car]-painter (24%) have increased the most.
In addition to global factors such as rising prices of imported products, the domestic economic and political situation also has a significant impact. The burden of excessive public debt and the emigration of citizens in the workforce contribute to rising prices.
Citizens talk about the burden of mortgage loans among the various reasons for emigration. Since 2022, official inflation has approached 14%, and in 2023, emigration from Georgia increased by 95.6% compared to the previous year.
This has to some extent led to a labor shortage. As a result, the cost of products and services has also increased, which has become one of the factors of inflationary pressure.
The price increase has had a particularly severe impact on gastronomic tourism, which is a key component of Georgia’s tourism sector. The rise in prices of basic food products has also been reflected in the prices of restaurant services. For example, the price of khinkali (Georgian dumplings) has increased by 12.5% (to around 2 GEL per piece), and the price of beer has increased by 10.8%. This reduces the country’s attractiveness for tourists, as Georgia is often associated with an affordable gastronomic experience.
Inflation negatively affects Georgia’s competitiveness, as rapid price increases in the domestic market make exports more difficult and reduce the purchasing power of the population. As a result, production is declining, which causes new price increases and maintains the “vicious circle” of inflationary pressure.
