Georgia's Central Bank Forecasts 4% Inflation for 2025

Georgia’s National Bank anticipates that inflation will return to its long-term target next year, following a temporary spike primarily caused by food prices, the bank’s president, Natia Turnava, told lawmakers on Monday, The Caspian Post reports citing foreign media.

Turnava delivered the bank’s latest projections to Parliament’s Finance and Budget Committee during the presentation of its 2026-2028 monetary and exchange-rate policy outlook.

According to the updated forecast, average inflation in 2025 is expected to come in at about 4 percent before easing toward the National Bank of Georgia’s 3 percent target starting next year.

Turnava pointed to several reasons why inflation has climbed above the target in recent months. She said food prices have been the main driver, partly because last year’s base figures were unusually low. External factors, including rising commodity prices on global markets, also pushed inflation higher. She described these external pressures as one-off developments that are likely to fade in the coming months.

When food is excluded, Turnava said, Georgia’s inflation indicators remain close to target and long-term price expectations are stable. She noted that over the previous two years inflation had averaged only 1.1 percent, well below the 3 percent target, which made this year’s increase more pronounced.

The central bank expects inflation to stay slightly above 3 percent for a short period, but Turnava told MPs the outlook remains under control as long as monetary policy stays tight and domestic demand stabilizes. She reiterated that inflation should return to the target zone over the medium term as food-related effects diminish.

According to Turnava, inflation expectations have not risen, because the current 5.2 percent reading largely reflects supply-side pressures rather than excess demand. She told lawmakers that in such cases central banks generally respond more cautiously, but stressed that Georgia’s central bank is prepared to raise interest rates if needed.

Turnava said the bank’s “neutral” interest rate is estimated at 7 percent. The current refinancing rate stands at 8 percent, which she described as a deliberately tight stance. She added that the central bank expects to keep policy relatively strict unless unexpected developments force a change.