Annual inflation was 3.5% in May-25
In May-25, Georgia’s annual inflation edged up to 3.5% from 3.4% in previous month. The uptick was mainly driven by domestic inflation, which climbed to 4.9% y/y (Apr-25: 4.7%), and by mixed-goods inflation, which rose to 5.8% y/y (Apr-25: 5.0%). In contrast, imported inflation stayed in deflation, slipping to -2.0% y/y (Apr-25: -1.0%), thereby cushioning overall price pressures. Core inflation, excluding food, energy and tobacco, eased further to 2.0% y/y from 2.3% y/y in the previous month.
By categories, annual inflation in May-25 was largely driven by price increases in food and non-alcoholic beverages (+8.3% y/y, +2.82ppts), healthcare (+9.0% y/y, +0.75ppts), education (+4.9% y/y, +0.25ppts), alcoholic beverages & tobacco (+3.3% y/y, +0.22ppts) and hotels & restaurants (+6.0% y/y, +0.20ppts) categories. In contrast, as in previous month, the communication category recorded a deflation of -12.8% y/y (-0.47ppts), followed by transport (-4.5% y/y, -0.54ppts) and furnishings, household equipment and maintenance (-2.3% y/y, -0.13ppts) in May-25.
On a monthly basis, there was a 0.4% y/y inflation in May-25, mainly due to price changes in food and non-alcoholic beverages (+1.6% m/m, +0.51ppts) and transport (-1.1% m/m, -0.12ppts) categories.
We forecast average annual inflation at 3.7% in 2025.
International reserves at US$ 4.6bn in May-25
Gross international reserves decreased by 0.3% y/y to US$ 4.6bn in May-25, according to NBG. Meanwhile, on a monthly basis, the reserves were up by 1.5% (+US$ 66.7mn). Changes in reserves were attributed to the changes in government and/or banking sector FX operations, and likely also to NBG’s FX purchases via BMatch platform (information will be available on 25 June). Notably, as of May-25, monetary gold accounted for 16.4% of total international reserves.
