Despite the appreciation of the lari, importing companies do not plan to reduce prices.
Georgian lari has dramatically strengthened in recent weeks, the National Bank fixed the exchange rate at 2.2309. During the previous year, the lari has lost 30% of its value which forced the importing companies to increase prices by on average 15-20%.
Director of the food importing company Grand Iva Chkonia says that the companies were forced to review the prices twice due to the lari’s fall. In Chkonia’s words, today the prices are set in accordance with the current exchange rate.
“When the rate stood at 2,4-2,5, the company worked at the expense of its own margins, otherwise, the price hikes should have been unrealistic,” Chkonia explains.
According to him, they are waiting for the strengthening of the rate because of the election year. Grand Director notes that the company has managed to survive during the depreciation period. As for the current situation, Chkhonia believes that prices in Georgia will drop sharply only if the lari’s rate sinks down to a mark of 1.8 as the losses caused to the companies can’t be compensated with a different way.
Uta Maziashvili, a member of the Supervisory Board of another importing company GD Holdings, also doesn’t expect consumer price reductions. He says a drop in prices will not happen, however, prices for certain products may be revised. In Maziashvili’s words, many companies carried out compensation by cutting marketing budget .
In the words of Zura Khutsishvili, Director of the Georgian Distribution Company, the company has purchased goods at high prices and despite the appreciation of the lari, couldn’t review the prices so far. However, Khutsishvili notes that competition in the market is huge, so the prices will start to decline. He explains that at the time the company didn’t hike prices significantly at the expense of its own budget. Khutsishvili adds that in parallel with the lari’s rate falling, sales have reduced that negatively affected the company’s activity.