The National Bank of Georgia (NBG) has announced that inflation remains below the target level.

According to the National Bank, annual inflation in September further decreased compared to previous months, settling at 0.6%. They also reported that the overall price level increased by 0.3% compared to August.

The maintenance of inflation within the target range is largely attributed to the low inflation rate of locally produced goods and services, which in turn indicates the stability of long-term inflationary expectations.

The decline in overall inflation compared to previous months was further facilitated by a reduction in import inflation. Core inflation, which excludes food, energy, and cigarette prices from the consumer basket due to high volatility, stood at 0.8%.

“In September, seasonal factors had the most significant impact on the consumer basket compared to the previous month. The price increase of Imeretian cheese raised monthly inflation by 0.2 percentage points, while price decreases in apples, grapes, cucumbers, and tomatoes collectively reduced monthly inflation by approximately the same amount.

On an annual basis, the rise in gasoline prices contributed most significantly to inflation. Compared to September of last year, gasoline prices increased by an average of 7.2%, contributing 0.3 percentage points to inflation. However, it’s worth noting that compared to previous months, the contribution of gasoline to overall inflation has decreased, which is associated with the gradual exhaustion of the base effect.

The reduction in inflation was primarily driven by decreases in internet and electricity tariffs, contributing 0.4 and 0.3 percentage points respectively. Food prices were 0.8% lower than in September of the previous year (contributing -0.2 percentage points to inflation). The most notable among these were price decreases in herbs and Imeretian cheese, which collectively reduced inflation by 0.4 percentage points,” the NBG’s report states.

Regarding domestic inflation, as noted in the document published by the National Bank, it remains at a low level and stood at 1.2% in September.

“The low level of domestic inflation is driven by a decrease in service inflation, while the recent reduction in imported inflation primarily reflects the gradual fading of the base effect caused by fuel price increases. The most notable aspects of mixed inflation continue to be the annual decrease in electricity tariffs and antibiotic prices.

Service inflation decreased to 1.6% in September. As mentioned, the gradual reduction in service inflation is largely related to the exhaustion of the base effect.

Additionally, the decrease in service inflation was significantly influenced by the reduction in internet costs in July-August (by 1.7 percentage points),” the National Bank of Georgia’s report states.