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In Late January, Price of All Products to Rise in Georgia

In late January, in Georgia  prices of all kinds of products will increase  –  “Commersant”  was told by  importers.

According to Director  of “GD-Holding” Uta Maziashvili,  due to the depreciation of the national currency, local products will become more expensive because the raw materials for local production are imported from abroad.

“We try to keep the price level from the reserves, but GEL  has been steadily declining, so prices will inevitably rise” – says the businessman.

Due to the devaluation of the national currency, food prices have already hiked.

Vakhtang Sadzaglishvili, Director of the distribution company “Sharm Trading”, says  that the management was forced to increase the prices of its products by an average of 5%.

“If the exchange rate of GEL does not exceed GEL  2 per dollar, then another round of price hike can be avoided. But if exceed, the further rise in prices of products is inevitable “- he notes.

Guram Brodzeli , CEO of “ Lux 200” dealing in food import  says  that importers are completely dependent on the national currency rate and have to adjust prices  in parallel  with the GEL devaluation.

“In the backdrop  of exchange rate fluctuations, to maintain prices at the same level became almost  impossible. The most painful is the rise in food prices, “- he underlines.

According to Director of the Center for Economic Research at the Caucasus University Mikheil Dundua, in this situation, much of the responsibility lies with the National Bank of Georgia (NBG).

“When the national currency began to fall, the government received an international loan of $ 145 million, and these funds were directed  to the reserves of the National Bank. Lari was released into circulation, but the National Bank did  not put dollars into circulation. This is a mistake, as it turns out that no matter what amount  the government will attract – all currency will  go into the reserves while  in circulation will remain only the national currency. It will have the same effect as uncontrolled emissions. In the current situation, the National Bank has to issue into the financial market at least half of the received currency, “- the expert believes.

In his opinion, in February  imports decreased, respectively, the rate of GEL  is likely to stabilize.