Inflation rate at 5.8% y/y and 0.8% m/m in October 2015
Annual CPI inflation rate was recorded at 5.8% in October 2015, according to GeoStat. Overall price changes were driven by price increases in food and non-alcoholic beverages (+4.1% y/y, +1.27ppts), health (+11.1% y/y, +1.04ppts), and furnishings and household equipment (+13.1% y/y, +0.82ppts), while prices in the transport category decreased 1.1% y/y.
Monthly inflation rate was recorded at 0.8% in October 2015. Price increases in food and non-alcoholic beverages (+0.9% m/m, +0.26ppts) and health (+2.0% m/m, +0.20ppts), and a price drop in the transport category (-0.8% m/m, -0.09ppts) were the major drivers of the monthly inflation dynamics.
International arrivals up 7.3% y/y in October 2015 and up 6.8% y/y in 10M15
After a 12.6% spike in September 2015, tourist arrivals posted another growth of 7.3% y/y to 0.5mn persons in October 2015, according to the Ministry of Internal Affairs. Increased arrivals from Armenia (+9.2% y/y, 25.5% of total), Azerbaijan (+5.1% y/y, 21.6% of total), and Russia (+15.3% y/y, 15.5% of total) were the major contributors to growth. In 10M15, total arrivals increased 6.8% y/y to 5.0mn persons.
Tax revenues posted a strong performance in 10M15, up 10.9% y/y
Consolidated budget tax revenues increased 6.8% y/y to GEL 616.5mn in October 2015 and 10.9% y/y to GEL 6.5bn, according to the Treasury Service. In 10M15, personal income tax revenues grew 15.0% y/y (27.2% of total), profit tax receipts +29.0% y/y (13.3% of total), VAT receipts +6.9% y/y (44.4% of total), excise tax +5.6% y/y (10.9% of total), and property tax +7.2% y/y (3.0% of total). The rest – receipts from customs duties and other taxes – decreased, but they have a minor share in total tax revenues.
NBG increased its policy rate by 50bps to 7.5%
At its meeting on November 4, 2015, NBG’s monetary policy committee increased the policy rate by 50bps to 7.5%. As NBG cited, monetary tightening is addressing the lari depreciation-related increase in inflation expectations and NBG expects that inflation will move to its target level of 5.0% in 2H16. NBG also stated that the impact of the recent external shocks on the exchange rate has been exhausted on the back of the adjustment in imports. The next committee meeting is scheduled for December 16, 2015.
Gross international reserves stood at US$ 2.4bn as of October 2015
Gross international reserves stood at US$ 2.4bn (-0.6% m/m and -8.0% y/y) and net foreign assets of NBG reached US$ 2.2bn (-0.5% m/m and -7.4% y/y) as of end-October 2015, according to NBG. The drop in reserves partly reflected NBG’s sale of US$ 20mn on the FX market in October.
