The National Statistics Service of Georgia is actively implementing a novel measure called the Harmonized Index of Consumer Prices. The latest data for the month of February has recently been made accessible, Sputnik Georgia has reported.
Currently, inflation in Georgia is calculated based on the Consumer Price Index (CPI) according to international standards. However, in European Union countries, the Harmonized Index of Consumer Prices (HICP) is used, which serves as a significant indicator of price stability.
As a result, the annual inflation rate calculated using European standards was 11.7% in March 2022, while according to the national methodology, inflation stood at 11.8%.
Differences in Methodologies between Georgia and the EU
The HICP differs from the CPI in several methodological aspects, primarily regarding the weighting of the consumer basket and the classification used.
Specifically, for the HICP, the weighting of the consumer basket includes expenditures made by both residents and non-residents in the country, while the CPI considers only expenditures made by residents both domestically and abroad.
In terms of classification, the European Union employs the "Classification of Individual Consumption According to Purpose" (ECOICOP), which slightly differs from the current international COICOP. However, it should be noted that the composition of the consumer basket and the microdata used are identical for both indices.
Inflation Forecast from the Head of the National Bank
According to the forecast from the head of the National Bank of Georgia, Koba Gvenetadze, inflation in 2022 is expected to be around 9%.
"The food price index has reached a new record level, and oil prices have increased. This poses a challenge, as it will require maintaining a strict monetary policy. There is also uncertainty in this regard. According to our forecast, inflation this year will be around 9%," said Gvenetadze.
According to the information from the National Bank, the escalation of inflationary risks amid the events in Ukraine has slowed down the projected pace of inflation decline worldwide.
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