Annual inflation was 1.0% in Aug-24
In Aug-24, annual inflation retreated further to 1.0%, down from 1.8% in July. The slowdown was mainly driven by a moderation in domestic inflation, which eased to 1.1% y/y in August from 1.9% y/y in July, alongside a 1.1% y/y decline in mixed goods inflation. Imported inflation also decelerated, reaching 3.0% y/y in August, down from 3.7% y/y in the previous month. Notably, core inflation, excluding volatile food, energy and tobacco prices, reduced further to 0.9% y/y in Aug-24 from 1.1% y/y recorded in previous month.
By categories, annual inflation in Aug-24 was mostly driven by price changes in transport (+7.4% y/y, +0.89ppts), alcoholic beverages & tobacco (+4.5% y/y, +0.31ppts), hotels & restaurants (+7.3% y/y, +0.24ppts), communication (-12.7% y/y, -0.48ppts) and utilities (-2.6% y/y, -0.21ppts) categories.
On a monthly basis, there was a 0.1% y/y deflation in Aug-24, mainly due to reduced prices in communication (-5.7% y/y, -0.20ppts) category.
Considering lower-than-expected inflation in 8M24, thanks to a stable GEL, we now forecast average annual inflation at 2.0% for 2024, revised downwards from the previous forecast of 2.5% (see latest macro forecasts here).
Tourism revenues estimated at US$ 670mn in Aug-24
Tourism revenues increased by 23.5% y/y to US$ 670mn in Aug-24, according to our estimates. Overall, in 8M24 tourism revenues reached US$ 3.2bn (+11.8% y/y) by our estimates. We forecast tourism revenues at US$ 4.3bn for 2024, up from US$ 4.1bn in 2023.
International reserves at US$ 4.8bn in Aug-24
Gross international reserves decreased by 10.9% y/y to US$ 4.8bn in Aug-24, according to NBG. Meanwhile, on a monthly basis, the reserves were up by 3.7% (+US$ 170.9mn). The changes in reserves were attributed to the government and/or banking sector FX operations, likely including NBG’s FX purchases (information will be available on 25 September). Notably, monetary gold accounts for 11.9% of total international reserves as of Aug-24.
