Is it possible to avoid inflation during a New Year season?

Maka Ghaniashvili

Christmas and a New Year is a trading season in the number of countries. Sales on retail trading reaches the peak, trading centers and different brands offer their customers new products.

People buy presents, decorations, food. In the US, for instance, Christmas trading seasons starts after the Thanksgiving Day. Numbers of American shops begin Christmas trading by the end of October and the beginning of November. Usually long queues stand in front of shops and trading centers in various cities. Media means often discuss how people stand in queues per hours and return home with a plenty of things.
Queues in front of food shops, trading centers or markets are probably usual in Georgia as well, although there is a difference – queues become less when December 31 is near. Population tries to buy all necessary things and food in advance. The reason of it lays in increased food prices during New Year season.
Department of Statistics of Georgia published customer’s prices index on December 12 that shows prices changes during the period of December 6-12. The index shows changes for 49 types of food and services. Price level increased in 0.62 % during a week: food prices – 0.51%, other goods 0.14%, service – 1.32%. Let us give you general data: prices on tomato increased in 13.8%, on carrot – 12.8%, on beet – 12.8%, cucumber – 9.5%, greens – 2.7%, butter – 2.2%, egg – 0.85%. Prices decreased on apple in 10%, on salt in 6% and on vegetable oil – 1.7%. We face the food price rising tendency, although New Year season trading hasn’t started yet and even more increased prices should be expected. We were interested in New Year season plans of several big trading centers in Georgia. As it turned out, main innovations offered to their customers are PR actions and small presents (Chupa Chups candies, calendars etc). As for grand Christmas and New Year sales – the concept does not exist in Georgia yet. Large trading companies expect price regulation on the market and are ready to set their own prices in accordance with the market. Marketing manager of Hypermarket Goodwill stated: ‘It’s hard to set New Year season prices, we update and change products every day, the market hasn’t been researched and studied yet. We’ll be able to set ‘Goodwill’ prices as soon as we have more information on market prices. We’ll do our best to take our customers wishes into consideration and have relatively low prices on goods. Although we can’t avoid market prices, and our index should correspond with the market’. As I have mentioned above, market doesn’t seem to be promising what is the reasons of traditional growth of inflation in pre-New year period, while in the most countries of the world have sales on goods. We should probably remark from the very beginning that lack of goods should not be blamed for the inflation growth. Georgia had a god harvest this year and there is no shortage of food. This may be stated by statistic data: 12,9 tons of wheat produced in 2006. According to October 1 2007 data, this index has reached 76,1. Let us show you the data: Barley 30,6 – 32,4 tons. Sunflower 12,3 – 15,9 tons; potato – 68,7 – 250,3 tons. Let’s draw our attention to fruits now: citrus harvest reaches 100 tons, exceeding the previous year’s indicator in 200%. Last year’s harvest was 25-30 tons of citrus. The same can be said on cattle production, for instance dairy production for the second quarter of 2006 reached 225 thousand tons. The indicator for 2007 reached 245 tons. 72,8 millions of Egg storage increased to 120 millions. Although a farmer does not have the opportunity of realization, he doesn’t know where to take and how to sell his product. Although, it’s absolutely necessary to have a supply corresponding to demand in order to regulate prices, especially when food storage in country gives you this possibility. Still, it is difficult to achieve. A farmer finds it difficult to take products to Tbilisi. It’s not the only trouble. Even if a farmer manages to take the product to Tbilisi, he finds it difficult to get a trading place, area where he can sell. There is a lack of places in the capital of Georgia for a farmer and a producer to sell their products. Goods are sold in speculated prices, inflation rate index goes up and up, and the reason to it is a organization problems. All the above mentioned becomes a challenge of creating optimal prices, developing small and medium size businesses.
There is no well organized New Year trading tradition, those things that have been accepted and set in foreign countries remains to be strange and unfamiliar in Georgia. It is necessary to work out a united complex policy in order to support farmers and assist them in taking their goods and products to the capital of Georgia. Besides, number of trading places should be increased.
Tbilisi Mayor’s Office New Year program mainly includes concerts and different entertaining events, although there is a change – New Year 2008. As part of the event at the following 4 places of Tbilisi : Zoo park, territory in front of the Parliament building, Rose Revolution park in Gldani and Varketili park New Year villages will be set, working during the period of December 25 – January 7, every day from 10:00 till 23:00. The Villages will have New Year boxes with beautiful decorations. Private companies or individual entrepreneurs will be given an opportunity to sell their products there. All that is required form them, is to conclude a contract in advance with the organization group. Trading areas in Christmas villages are free. The success of the initiative, as well as its scale and frequency will be shown in the future.