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12% Contraction in Fuel Prices Result in Low Inflation

In May the general level of consumer prices rose by 0.6% compared to April 2015.

While the May inflation in 2014 marked 0.3%. As a result, in the reporting period the annual inflation rate increased month on month and totaled 3.5%. Prices of the consumer basket rose by 3.5% in May year on year. The report of the National Bank of Georgia (NBG) reads prices have considerably decreased on the global markets and annual downturn in prices will be maintained for such products in the consumer basket as diesel and petrol. The prices on these products have shrunk by 12.2% and 11.6% respectively. Downturn in oil products prices has considerably lowered the annual inflation. It is worth noting gas prices have increased by 14.5% compared to May 2014.

In the reporting month compared to May 2014 a general level of food product prices increased by 4.1%. A major upturn in prices was recorded on fruits and vegetables (27.1%).

Moreover, annual growth in prices was registered on oil and fat products, sugar and confectionaries. Downturn in prices was registered on milk, cheese and eggs, vegetables. Prices of alcoholic beverages have increased by 2.7%. An 11.9% upturn was registered on alcoholic beverages and tobacco products after excise tax increased on tobacco products and alcoholic drinks.  As to other groups of the consumer basket, prices considerably increased as a result of the exchange rate devaluation. A major rise in prices was registered on furniture, home appliances, repair works, medications.

In the reporting month compared to May 2014 a 9.5% upturn was registered on products with a long-term use. This category mainly includes imported goods such as automobiles, major home appliances and so on. The exchange rate depreciation has affected the upturn in prices in this category. Lower growth in prices was recorded on services and goods with a short-term use. The downturn marked 3.4% and 3.3% respectively, while prices rose by 0.6% on goods for a medium-term use.