Roman Gotsiridze: “Georgia experienced an inflation rate of 15% whilst that of Europe ranged between 2%-3% in 2021.”

Verdict: FactCheck concludes that Roman Gotsiridze’s statement is HALF TRUE.

The annual inflation rate in Georgia reached 13.9%, contrasting with the EU’s 2.9% and Europe’s 3.5% by the end of 2021.

Similarly, relative inflation in Georgia was high, further confirmed by the fact that the country was 22nd in the world in terms of price growth rate and second in Europe after Turkey.

Despite the inflation rate in Georgia amounting to 11.9% in 2022, the country moved to the 50th place in terms of inflation. Furthermore, higher inflation rate was recorded in 26 out of the 27 EU member countries in 2023.

Consumer prices increased by 26% in Georgia, as compared to 20% in the EU, 21% on the continent of Europe and 22% in the world from 2021 to 2023. If consumer prices increased more than those of Georgia in only 21 countries in 2021, inflation rates lower than Georgia were only observed in 16 countries in 2023.

Although Roman Gotsiridze acknowledged the decline in post-peak price growth and further noted the acceleration of inflationary processes in Europe in 2022, his claim did not regard the fact that high inflation persisted in most countries across the continent in 2023.

Considering the differences between various methodologies, and the fact that various products weigh differently in the consumer baskets across different countries, a simple comparison of inflation rates may not fully reflect changes in consumer prices. However, FactCheck utilised the same method used by the politician.

Whilst the numbers as mentioned by the MP are mostly accurate, there are some inaccuracies in the statement, nonetheless. Additionally, a separate calculation for the one-year period might provide exaggerated results. Considering the aforementioned factors, FactCheck concludes that Roman Gotsiridze’s statement is MOSTLY TRUE.

Analysis

Roman Gotsiridze, a member of the Eurooptimists parliamentary group, during his appearance on the Palitra News show 3600 commented on inflation, claiming (from 6:18): “Despite the current low inflation rate, prices in Georgia increased by 15% in 2021 whilst Europe recorded 2-3% growth rates… Amongst the 193 [UN member] countries, Georgia was amongst the 20 worst-ranking states in terms of price dynamics.”

GeoStat calculates inflation on a yearly basis, determining price growth rates for comparisons to the previous month, and the same period last year. Annual inflation demands more attention as seasonality impacts prices.

Moreover, annual inflation varies month-to-month. The price growth rate in January as compared to January from the previous year will likely be different than that of May as compared to May from the previous year and similarly for October. Thus, the inflation of the whole calendar year is calculated as the average of the annual inflations over the 12 months.

The annual inflation constituted 2.8%[1] in January 2021 and 13.9% in December whereas the 12-month average amounted to 9.6%. Roman Gotsiridze likely referred to the inflation in December by talking about the 15% inflation rate.

Graph 1: Annual Inflation by Months in 2021

Source: National Statistics Office of Georgia

Roman Gotsiridze referred to European data, stating that inflation rate in Europe ranged from 2% to 3% in 2021.

Consumer prices in the EU increased by 2.9% in 2021 and by 2.6% in the Eurozone. Hungary and Poland recorded the highest inflation rates amongst the EU states at 5.2% whilst Greece, Malta and Portugal witnessed inflation rates lower than 1%.

Graph 2: Inflation in the European Union in 2021

Source: Statistics office of Europe (Eurostat)

Inflation of other European non-member countries reached 6.1% on average whilst the overall European average amounted to 3.5%. Turkey observed the highest price growth amongst other non-member countries at 19.6%.

Moreover, Roman Gotsiridze stated that Georgia was amongst the 20 worst-ranking countries in terms of inflation in 2021. Georgia ranked 22nd whilst Venezuela ranked first with an inflation rate of 1,590% in 2021 as per the International Monetary Fund statistics (Venezuela was omitted from the graph as its visualisation would have made it impossible to comprehend the data of countries other than Sudan and Lebanon). Furthermore, three-digit inflation rates were observed in Sudan and Lebanon.

Graph 3: Countries with the Highest Inflation Rates in 2021

Source: International Monetary Fund

Whilst it is true that Georgia ranked 20th, as Venezuela and Seychelles were omitted from the World Bank report, the difference of two ranking positions are not significant. What is more important is that Georgia not only exhibited significant differences in absolute terms as well as relative values, surpassing other countries on the continent, except for Turkey, in terms of the magnitude of inflation.

However, substantial developments in the overall scenario were recorded in 2022. Despite the inflation rate in Georgia reaching 11.9%, it moved from 22nd to the 50th place. Furthermore, higher inflation rates were observed in seven EU member states, including Estonia, Lithuania, Latvia, Poland, Hungary, Romania and Bulgaria. Moldova, a candidate for EU membership, experienced inflation higher than 28% during the same year whilst Azerbaijan recorded inflation of 13.9%. Inflation increased from 4.7% to 8.7% globally whereas Europe recorded an overall inflation rate of 9.9% as compared to the previous 3.5%.

An inflation rate of 6.9% globally, and 6.5% in Europe, persisted in 2023 whilst that of Georgia declined significantly to 2.5%. Furthermore, higher inflation rate was recorded in 26 out of the 27 EU member countries as compared to Georgia whilst Belgium recorded the same inflation rate in 2023. It can be said that the Georgia managed to overcome the inflationary obstacles linked to the Russia-Ukraine war more easily when compared to other countries.

Aggregating the three-year figures, Georgia experienced a 26% growth rate in prices whereas Europe and the world observed increases of 21% and 22%, respectively. Although it is true that consumer prices increased at a higher rate as compared to Europe, the difference is marginal.

Graph 4: Aggregate Inflation of the 2021-2023 Period

Source: International Monetary Fund

Whilst Georgia did experience significantly high absolute and relative values of inflation, surpassing all European countries except for Turkey in terms of price growth rates, the scenario shifted in 2022 and 2023. The inflation rates in the EU and Europe as a whole were 2.5-fold higher than in Georgia during the aforementioned time frame. Although the MP’s statement is mostly accurate, it, nevertheless, includes certain inaccuracies. Moreover, a separate calculation for the one-year period might provide exaggerated results. Considering the aforementioned factors, FactCheck concludes that Roman Gotsiridze’s statement is MOSTLY TRUE.