Inflation in Georgia: Which Sectors Are Currently Influencing It?

Inflation is a key indicator reflecting economic dynamics and directly impacting society. In December 2024, Georgia’s annual inflation rate stood at 1.9% (source: Geostat), a significantly lower figure compared to the high inflation periods of recent years.

Georgia maintains an average inflation level compared to the region. For example, in December 2024, Armenia recorded an annual inflation rate of 1.5%, while in Azerbaijan, it was 2.1%. Despite the overall low inflation rate, a sectoral analysis reveals the areas that contribute to price increases and decreases.

Inflation growth is more influenced by the rise in prices of locally produced goods than by imported ones. Food, beverages, and tobacco have the greatest influence on inflation formation.

The food and non-alcoholic beverages group saw a price increase of 3.6%, contributing 1.18 percentage points to the overall inflation rate. This price rise was driven mainly by vegetables (15.7%), oil (10.1%), coffee and tea (8.8%), and sugar and confectionery (6.9%). The increase in prices for these products is especially burdensome for consumers whose expenses are largely concentrated on food products. Similarly, the alcoholic beverages and tobacco category recorded a 5.9% price increase, contributing 0.4 percentage points to the overall inflation.

In contrast, the communications sector had a deflationary effect, with prices decreasing by 12.7%, which translated to a negative contribution of -0.47 percentage points to inflation. This change is largely attributed to reduced prices for internet services, easing consumer expenses and highlighting improved accessibility to technological services.

Despite the overall low inflation level, rising prices in the food and beverage sectors remain a significant challenge for a large portion of the population. At the same time, the deflationary influence of the communications sector is perceived as a positive signal, representing a step forward toward economic stability.