Why Local Products Are Getting More Expensive — The Structure of Rising Inflation in Georgia

According to Geostat, Georgia’s annual inflation rate reached 4 percent in June 2025. While this figure may seem moderate, a closer look at its composition reveals a different picture: prices are rising faster for locally produced goods than for imported ones, pointing to deeper structural issues within the domestic economy.

The largest contributor to annual inflation was food and non-alcoholic beverages, with prices in this group rising by 10 percent over the year. This alone added 3.3 percentage points to the total inflation rate. The most notable increases were seen in vegetables (26%), oils and fats (21%), coffee, tea, and cocoa (15%), bread, dairy products, and eggs — all primarily local goods. Meanwhile, in import-dependent categories like transport (-5.3%) and furniture (-1.4%), prices have actually decreased.

This imbalance is even clearer when analyzing inflation by product origin. Local goods are experiencing significantly higher inflation than imported ones. For example, transport, which heavily depends on imports, saw prices fall by 5.3 percent over the year. In contrast, locally produced goods became more expensive — suggesting domestic factors are driving inflation, including rising production costs, low productivity, and logistical challenges.

Other sectors reinforce this trend. Healthcare prices rose by 9.4 percent — a particularly sensitive area for households. Similarly, services like insurance (8.7%) and financial services (5.4%) also saw considerable increases.

In this context, local inflation has remained consistently higher than imported inflation, not only in 2025 but also in previous years like 2023 and 2024. Domestic supply chains continue to struggle with price stability, pushing more of the burden onto consumers.