Inflation was 2.4% y/y and -1.0% m/m in December 2020
Annual CPI inflation retreated to 2.4% in December 2020, from 3.8% y/y in November 2020, according to Geostat. The decline in inflation mostly reflected the government’s subsidies for utility bills, subtracting 1.94ppts from overall inflation rate. Core inflation (non-food, non-energy) was 5.3% in December, while core inflation excluding tobacco was 4.9%. By categories, annual inflation was mainly driven by price changes in food and non-alcoholic beverages (+6.8% y/y, +2.19ppts), health (+9.6% y/y, +0.76ppts), alcoholic beverages and tobacco (+8.6% y/y, +0.56ppts), housing, water, electricity, gas and other fuels (-21.7% y/y, -1.94ppts) and transport (-2.3% y/y, -0.28ppts) categories. On a monthly basis, there was 1.0% deflation in December 2020, reflecting price decrease in utility categories due to the government’s subsidies.
International reserves at US$ 3.9bn in December 2020
Gross international reserves increased by 11.5% y/y to US$ 3.9bn in December 2020 according to NBG. On a monthly basis, the reserves were up by 4.3% (+US$ 159.6mn). Changes in reserves were attributed to the disbursement of donor funds to the budget and FX sales totaling US$ 49.8mn by NBG in December 2020.
NBG sold US$ 40mn
On 6 January 2020, the NBG intervened on the FX market and sold US$ 40mn to limit GEL volatility.
