Inflation indicators in Georgia: differences in calculations according to European standards

The inflation rate in Georgia, measured according to the European methodology, showed some difference from the indicators calculated according to national rules. In June 2023, the annual inflation calculated according to European standards was 0.1%, while according to the national methodology, this indicator reached 0.6%.

Currently, Georgia uses an international standard based on the Consumer Price Index (CPI) to measure inflation. At the same time, the Harmonized Consumer Price Index (HICP) is used in the EU countries, which is a key indicator of price stability.

The differences between the methodologies for calculating inflation in Georgia and the European Union are due to several factors, the main of which are the composition of the consumer basket and the classifier used. The HICP takes into account the expenses of both residents and non-residents in the country when determining the weight of the consumer basket, while the CPI takes into account only the expenses incurred by residents both in the country and abroad.

The classifier used in the calculation is also different. The European Union uses the "Classification of Individual Consumption by Purpose" (ECOICOP), which is slightly different from the international COICOP classification currently used. However, it should be noted that the composition of the consumer basket and the microdata used are identical for both indexes.

When analyzing the inflation indicators in Georgia for different categories, you can see differences in price changes. For example, in the "Products" category, the inflation calculated according to the European standard was -1.2%, while according to the national standard this indicator was 0.0%. It should also be noted that there are differences in inflation rates in the categories of "Healthcare", "Transport", "Hotels and restaurants" and others.

Studying these differences will help to more accurately understand the dynamics of price changes in various sectors of the Georgian economy and assess the impact of various factors on inflation in the country. The analysis of inflation indicators according to European standards and national rules allows us to study the economic situation more deeply and take appropriate measures to ensure the stability of the price level in Georgia.