TRENDS IN PRICE INCREASES AND WAYS TO MITIGATE THEM IN GEORGIA

Summary

The issue of reducing prices has been included by the Government of Georgia in its list of priorities. Price reduction is not a one-time act or campaign that can be temporarily confined within certain limits. The two main tasks of any government are to ensure the safety of the population and to create conditions for increasing its well-being.

The government’s increased activity regarding price regulation is not a PR campaign, but rather a manifestation of one of its strategic directions, which is especially noteworthy today. Over the past two years, the volume of our imports has increased approximately twelvefold. Under such conditions, any deviation in price formation, as well as in healthy competition, has a much larger scale than it did in the early 2000s. Naturally, the larger the volume of resources in motion, the more acute the issue of fairness and healthy competition becomes.

The policy of price reduction should be considered in a context that has specific manifestations. First of all, it should be examined whether oligopoly exists in certain sectors or whether companies have agreements coordinating their pricing policies. Then the price level itself should be analyzed—whether, besides oligopolies, it is caused by certain organizational or technical problems, duplication, or an inefficient number of logistics chains. This problem is not new. An efficient economy is one that manages to use the resources available to society and companies rationally. All of this creates the socio-economic background in which our government operates to study high price levels and implement measures to reduce them to an optimal level, so that irrationally high prices do not occur.

The history of the existence of a market economy also includes the history of price increases and inflation. This trend will continue in the future, as it has its own causes: life develops, many things become more expensive, and this is a dynamic process. The main task here is to ensure that the growth rate of the population’s income outpaces the growth rate of prices. In that case, the problem will be much less severe.