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Annual inflation rose to 5.9% in Apr-26
Annual inflation rose to 5.9% in Apr-26, up from 4.3% in previous month. The acceleration was mainly driven by increases in fuel and electricity tariffs, which contributed a combined 2.3 percentage points to headline inflation in April (of which 1.3 percentage points represent the direct effect), based on our estimates. Core inflation, which excludes food, energy and tobacco prices from the basket, stood at 3.2% in Apr-26, compared to 2.4% in preceding month. By categories, annual inflation in Apr-26 was largely driven by price increases in food and non-alcoholic beverages (+7.5% y/y, +2.58ppts), transport (+10.3% y/y, +1.20ppts), utilities (+6.5% y/y, +0.62ppts), alcoholic beverages & tobacco (+6.5% y/y, +0.41ppts), healthcare (+4.9% y/y, +0.41ppts) and hotels & restaurants (+7.5% y/y, +0.23ppts) categories. Meanwhile, deflation was recorded in communication (-4.0% y/y, -0.12ppts) and furnishings, household equipment & maintenance (-2.4% y/y, -0.13ppts).
We forecast average annual inflation at 4.8% for 2026.
NBG raised monetary policy rate to 8.25%
On 6 May 2026, the NBG's Monetary Policy Committee raised the policy rate by 25bps to 8.25%, aimed at keeping inflation expectations well-anchored amid elevated risks stemming from global energy markets. On the same day, the Joint Committee on Financial Stability and Monetary Policy reduced the upper bound of the reserve requirement on foreign currency liabilities by 5 percentage points, reverting it to its previous level, amid tighter global financial conditions linked to the Middle East conflict. Additionally, the Financial Stability Committee raised the threshold for unhedged foreign currency loans from GEL 750,000 to GEL 1,000,000, effective 1 July 2026, as part of the NBG's ongoing de-dollarization policy. The next monetary policy meeting is scheduled for 17 June 2026.
International reserves at US$ 6.5bn in Apr-26
Gross international reserves increased by 43.2% y/y to US$ 6.5bn in Apr-26, according to NBG. On a monthly basis, the reserves grew by 2.4% (+US$ 154.2mn). Changes in reserves were attributed to the government and/or banking sector FX operations, and likely the NBG’s FX trading via BMatch platform (information will be available on 25 May). Notably, as of Apr-26, monetary gold accounted for 16.4% of total international reserves.
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