Inflation and Incomes – Price Growth Dynamics in Georgia and Neighboring Countries.
Growing prices and declining purchase value: in this respect, all three South Caucasian republics have recorded almost the same indicators. According to Geostat, the national statistics service of Georgia, the 2018 annual inflation rate in Georgia was at 1.5%. During the reporting year, prices on food products and soft drinks rose compared to 2017. For instance, the price of fish products increased by 11.1%, the price of bread and bread products rose by 8.5%, the price of meat and meat products increased by 4.5%.
Compared to 2017, in 2018, Georgian citizens paid 3.1% more money for water, natural gas and electricity. Fares have also risen by 1.7%. The price for the exploitation of personal vehicles rose by 3.4%. Prices in the healthcare sector increased by 2.9%.
An analysis of prices on various products shows that over the past 2 years, the price of cigarettes rose by 45%. Specialists explain that cigarette prices increased as a result of an increased excise tax. Over the past 2 years, the petrol price increased by 25%-26%. Specialists asserts that, according to their analysis, a higher excise tax has raised the petrol price, too. According to official statistics, starting with in 2006, prices of consumer goods and services in Georgia increased by about 50%. In this period, the prices of goods and services in the healthcare sector rose by 79%. Food product prices increased by 69%, and the prices in the education sector rose by 64%.
Inflation, first of all, lowers the purchasing value of incomes. Based on the above-mentioned statistics, products that cost 1000 GEL in 2006, now can be bought for 1500-1600 GEL.
Comparatively higher inflation rate was registered in Azerbaijan. According to Geostat, prices of consumer goods and services increased by 2.3% in the country in 2018.
Compared to 2017, in 2018, prices on food products, beverages and tobacco products rose by 1.7%. Non-food products saw a 2.6% upturn in prices. It is interesting that the 2017 annual inflation rate in Azerbaijan was at 12.9%. Specialists assert that similarly high inflation rates derive from the current challenges in the oil and gas industry of Azerbaijan. Because of the comparatively lower oil prices in 2017, Azerbaijani economic growth made up only 0.1%. In this respect, the 2018 also seems modest, as the state economy in Azerbaijan grew only by 1.4% in 2018.
As for Armenia, according to preliminary forecasts, in 2018 the annual inflation rate exceeded 3%, but the real indicator fared better. According to the statistical service of Armenia, the annual inflation rate in 2018 made up 2.5%.
This indicator is worse for Armenia than Georgia and Azerbaijan. However, the difference is unimportant. According to official statistics, consumer prices in Armenia rose by 2.5% in 2018 and amounted to 4.5% for non-food products.
Armenia’s economic growth in 2018 made up 5.2%, and average salaries saw a 1% contraction. According to official statistics, GDP per capita in Armenia is 4,186 USD.