Irakli Abesadze: “During the rule of the Georgian Dream, prices have increased by 20% on goods, by 18% on utilities, by 60% on medicines and by 37% on healthcare.”

Irakli Abesadze: “During the rule of the Georgian Dream, prices have increased by 20% on goods, by 18% on utilities, by 60% on medicines and by 37% on healthcare.”

Irakli Abesadze: “During the rule of the Georgian Dream, prices have increased by 20% on goods, by 18% on utilities, by 60% on medicines and by 37% on healthcare.”

The FINANCIAL -- Verdict: FactCheck concludes that Irakli Abesadze’s statement is TRUE.

Resume: According to GeoStat’s data, consumer prices have increased by 19% during the last six years since the Georgian Dream came to power (October 2018 as compared to October 2012). In this period, prices on goods and alcohol increased by a total of 20.2% which is approximately within the target level of inflation. Utility prices increased by 18.2%. Notably, during the pre-election campaign in 2012, the Georgian Dream promised to significantly reduce tariffs on electricity and gas. The promise was not kept and tariffs in fact increased. Prices increased by 37.2% in the health sector. Prices on medicines and therapeutic devices increased by 68.4% which is largely associated with the devaluation of the national currency.

Analysis

At the plenary sitting of the parliament, European Georgia MP, Irakli Abesadze, stated: “During the rule of the Georgian Dream, prices have increased by 20% on goods, by 18% on utilities (despite the promise to halve the utility tariffs), by 60% on medicines and by 37% on healthcare.”

GeoStat publishes monthly data on the consumer price index which shows a change of prices on goods and services. Price stability does not imply reducing the inflation rate to 0 percent. The National Bank determines the target level of inflation which reflects the level of change of prices that will be optimal at the current stage of economic development.

The annual inflation rate in 2013-2018 was mainly within the target level. The year 2017 was an exception with the inflation rate of 6.7% which was largely stipulated by a temporary factors; in particular, an increase in the excise rate. The consumer price index includes 12 commodity groups. The overall inflation rate may be within the scope of the target level but prices on individual groups could be increased or/and decreased.

Irakli Abesadze explained to us that he used the personal inflation calculator which is published on the webpage of Geostat in order to calculate the inflation rate on individual commodity groups.

From October 2012 to October 2018, the inflation rate (consumer price growth rate) was 19.1%. During this period, prices increased by 70.6% on alcoholic beverages and tobacco. Prices decreased by 20.1% on clothes and shoes. Prices on goods and non-alcoholic drinks increased by 20.2% during the last six years. It should be noted that the price growth rate on goods is within the target inflation. The inflation rate was 37.2% in the healthcare sector (medical products, outpatient services, hospital services).

Prices on medicines and therapeutic devices increased by 68.4%. The price growth on medicines is directly related to the devaluation of the national currency because a large portion of medicines are imported as are products used for domestic production. Utility tariffs (water, electricity, natural gas and others) increased by 18.4% which is mainly related to the increase in the tariffs of electricity and natural gas. In 2012, one of the Georgian Dream’s pre-election promises was to significantly reduce tariffs on electricity and natural gas. The promise was broken. Electricity and gas tariffs have increased as compared to 2012.

Graph 1: Change of Prices during the Last Six Years according to Individual Groups (October 2018 as compared to October 2012)

Source: GeoStat