Annual inflation in July will slow down to 8.5-9% according to preliminary figures, PM Nika Gilauri said on July 26.

“We expect this trend to remain and inflation will further go down in following month,” he told a government meeting.

Georgian state statistics agency said earlier this month, that country’s year-on-year rate of inflation fell from 14.3% in May to 10% in June, helped mainly by a month-on-month fall in food prices.

National Bank of Georgia (NBG) reduced on July 20 key rate from 8% to 7.75%.

“Reduction of consumer price index was anticipated, but the recent dynamic indicates on faster than expected decrease of inflation,” NBG said, adding that it deemed appropriate to start softening monetary policy.

Vitaliy Vavryshchuk, a senior analyst at BG Capital, investment arm of Bank of Georgia, said that the NBG changed its stance in favor of loosening monetary policy after inflation slowed down to 10% and after the May economic growth “slowed to a critical 1.4%” year-on-year from 9.7% in January y/y.
 
“We expect the decision will be followed by further cuts given that inflationary pressures are easing… and as the NBG’s efforts shift to stimulating economic growth,” Vavryshchuk said.