Khachapuri Index Project
| Based on | Monthly | Annual | ||
| Inflation | Aug_2010 | Kh index | 9.3% | 7.3% |
| July_2010 | CPI index | -0.2% | 7.0% |
Khachapuri index V.S. CPI index
The traditional methodology for tracking inflation is to construct a so-called consumer basket, consisting of goods consumed on a regular basis, and monitor its price over time. However, constructing a realistic basket of such goods is a rather complicated task, not least because preferences and consumption patterns tend to change over time. Statistical agencies from time to time update the basket by changing its ingredients or their relative weights, but that makes tracking inflation even more cumbersome and less transparent.
Therefore, our aim was to design a way of tracking inflation using the simplest and the most robust consumer basket that would appeal to everybody. Our inspiration was the "Big Mac Index" of The Economist magazine. That 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. In order to construct a similar index, but for measuring inflation, we asked ourselves "What would be the most common meal in Georgia?" and the answer was khachapuri. It is perhaps the most popular Georgian food, seen as the pride of local cuisine, produced and consumed by practically every family regardless of its ethnicity.
Because khachapuri is so popular in Georgia, changes in its price would provide a good picture of inflation in the country. We have, therefore, created the "Khachapuri index" for tracking inflation in Georgia and, in the longer run, exploring the differences in the costs of living in its cities and regions. As opposed to other indices used for calculating inflation, our "basket" includes only those ingredients that are needed to cook one Imeretian khachapuri - flour, cheese, yeast, eggs, and butter. It also includes energy costs - gas and electricity.
In addition, we have designed an alternative index, that of a "Frugal Housewife." This particular index tracks costs of baking a khachapuri using the cheapest ingredients.
Project Status: Ongoing
Implemented by: ISET faculty member Robert Tchaidze, ISET's research associates - Maka Chitanava, Giorgi Gedenidze, Maya Grigolia, Lasha Labadze and Gia Modebadze.
Contact Person: Lasha Labadze, l.labadze@iset.ge
