The pulse of the Georgian economy: the Khachapuri Index

The Economist created the Big Mac index in 1986 to compare purchasing power parity (PPP) between countries. The basic principle is simple and consists in comparing the prices of Big Mac hamburgers bought at MacDonald’s fast food restaurants in different countries.

The ambition of the Khachapuri index is different because there aren’t as many countries between which to compare Khachapuri prices. As a matter of fact, few who haven’t been to the Caucasus are likely to know about this traditional Georgian dish, not mentioning that it comes in various sorts and appearances.

Khachapuri is a cheese pie at least as widespread in Georgia as pizza is elsewhere. Check this article entitled “Georgia’s Cheese Bread Might Be Better Than Pizza” (1).

Adjarian Khachapuri Batumi  

Photo: The best Adjarian Khachapuri in Georgia!

The Policy Institute of the International School of Economics at Tbilisi State University (ISET) defines the Khachapuri index as the average cost of cooking one standard Imeretian Khachapuri. The evolution of this cost is indicative of inflation and economic trends in the country. The basket of goods for calculating the index comprises only the ingredients necessary for its preparation (flour, cheese, yeast, eggs, and butter) and its energy costs (gas and electricity).

The homepage of the index is http://www.iset-pi.ge/index.php/khachapuri-index. The average cost of cooking one standard Imeretian Khachapuri in November 2014 was 3.34 GEL. In March 2015, this cost dropped to 3.15 GEL, driven down by the expected seasonal decline in cheese prices: increase of the supply of fresh milk and lower demand during the fasting period preceding Easter. Year on Year, the overall average cost of preparing an Imeruli Khachapuri fell 3.1%. Prices fell for locally produces goods (egg and cheese, cheese is the most expensive ingredient) but increased for imported ones (yeast, butter, flour) following an upward trend of the US dollar against the lari (GEL).(2)

 

Sources:
(1) http://munchies.vice.com/articles/georgias-cheese-bread-might-be-better-than-pizza
(2) At the time of writing, the new website of the Policy Institute of ISET is under construction. We report on the updated version of the index published on April 6th, not available at the time of writing on the website of the institute but cached by search engines:
– http://www.iset­-pi.ge/index.php?article_id=415, retrieved on April 27th, 2015 from http://webcache.googleusercontent.com/search?q=cache:IePk4kvvkN0J:www.iset-pi.ge/index.php%3Farticle_id%3D415+&cd=1&hl=en&ct=clnk&gl=ge
– http://www.iset-pi.ge/index.php?article_id=1369&clang=0, retrieved on April 27th, 2015 from http://webcache.googleusercontent.com/search?q=cache:GlH4uhW98F8J:www.iset-pi.ge/index.php%3Farticle_id%3D1369%26clang%3D0+&cd=2&hl=en&ct=clnk&gl=ge