A “particular concern” for increased inflation was named by the bank in its comments, with the Consumer Price Index growing by 0.3 percent in December 2021 and the annual inflation rate amounting to 13.9 % in the country. 

"The base effect of the 2020 subsidy on utility bills was the main driver for this increase since the month before November,” the statement released by the bank reads.  

The National Bank of Georgia further said the high inflation rate would continue to persist in January and February, before beginning to decline gradually starting in the spring.

The statement also mentioned a surge in consumer commodity prices on international markets, transmitted to the local market through imported raw materials and finished goods, as one of the key factors contributing to the increased inflation.

However, it also noted “the recent strengthening of the nominal effective Georgian Lari exchange rate has somewhat eased the pressure from international markets.” The MPC had decided to “maintain tight monetary policy” until “the risks of rising inflation expectations are sufficiently mitigated”.

“The non-governmental organization Society and Banks said 185,300 loans tied to floating interest rates remained active as of January 1, which meant the prices of these loans could grow as well, due to an increased refinancing rate. The total volume of loans issued that are tied to floating interest rates amounts to 8.69 million GEL, ”the NGO stated. 

The next meeting of the MPC will be held on March 30.