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ISET Khachapuri Index. Inspiration. Aim - design a way of tracking inflation using the simplest and the most robust consumer basket that would appeal to everybody. Inspiration. “Big Mac Index” of The Economist.

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Inspiration
Inspiration

  • Aim - design a way of tracking inflation using the simplest and the most robust consumer basket that would appeal to everybody.


Inspiration1
Inspiration

  • “Big Mac Index” of The Economist.

    • This particular index is used to measure the purchasing power parity between any two countries by comparing the price of a "standard" good – the Big Mac hamburger – that is identical across countries

  • Similar index – but to trace inflation and the cost of living


  • Why khachapuri
    Why Khachapuri?

    • “The most common meal in Georgia?”- Khachapuri

    • The pride of local cuisine

    • Produced and consumed by practically every family regardless of its ethnicity


    Khachapuri index usage
    Khachapuri Index usage

    • Analytical purposes:

      • Cost of living across space and time

      • Changes in the terms of trade

      • Impact of global commodity prices

      • Seasonal fluctuations in demand

      • Seasonal fluctuations in agricultural supply

      • Market structure


    Kh index basket
    Kh-Index “Basket”

    Cheese

    Yeast

    Price of Energy (gas, electricity)

    • Cons

      • exclusion of other important consumer goods

    • Pros

      • Simplicity

      • Transparency

    Butter

    Eggs

    Flour

    Milk


    Kh index methodology
    Kh-Index Methodology

    • First Tbilisi Survey - August 2008

      • Three major open markets in Tbilisi (so called “Bazari”)

    • May 2011 - survey expanded:

      • Kutaisi

      • Batumi

      • Telavi

    Kutaisi

    Gori

    Batumi

    Telavi

    Tbilisi


    Index compilation method
    Index compilation method

    • Interview 5 sellers of every item in the Khachapuri basket

    • Calculate the average cost of cooking one portion of Khachapuri in different cities

    • Calculate the minimum and maximum prices of one Khachapuri portion


    Index calculation techniques
    Index Calculation Techniques

    • Calculate following indices for each city and the country as a whole:

      • Khachapuri Index (Kh-Index)

      • Frugal Housewife Khachapuri Index

      • Monthly Kh-Index inflation

      • Annual Kh-Index inflation


    Explanatory power kh index vs cpi
    Explanatory PowerKh-Index vs. CPI


    Explanatory power kh index vs food cpi
    Explanatory Power Kh-Index vs. Food CPI





    Kh index in the financial http www financial ge pdf epaper pdf
    Kh-Index in The Financialhttp://www.financial.ge/pdf/ePaper.pdf

    • Since June 2011 - Kh-Index column in The Financial on a weekly basis

    • 63 column published

    • Two main sections in each:

      • Kh-Index analysis

      • “Economic lesson of the week”


    Economic lessons of the week
    Economic lessons of the week

    • Labor migration and remittances to Georgia

    • Farmer cooperation, the Nikozi experiment assessed


    Economic lessons of the week1
    Economic lessons of the week

    • No money, no venture, no gain in Georgia’s agriculture

    • Georgian driving manners and economic competitiveness


    Economic lessons of the week2
    Economic lessons of the week

    • IMF monetary policy prescriptions in action


    Economic lessons of the week3
    Economic lessons of the week

    • How rich Georgia really is?


    Economic lessons of the week4
    Economic lessons of the week

    • Are Georgian village communities able to organize themselves?

    • The Case Of Shrosha



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