The Khachapuri Index

Posted on April 11, 2012 by

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“Wait…what? Khachapuri Index….? Is this for real? No…it can’t be!”

I quickly closed the newspaper and turned to its cover to ensure that I was indeed reading Financial, an English-language business newspaper in Georgia. I was sure I was, but The Onion-esque article I had just encountered made me do a double-take and double check. In a business paper at first glance, it seemed thoroughly out of place; however, now it makes perfect sense.

Welcome to the world of “The Khachapuri Index.”

I’ve always loved economics for some reason. When I first was introduced to the Guns versus Butter economic exercise in high school, it was a great “A-ha!” moment for me. One of my favorite books is New Ideas from Dead Economists, which includes a line that goes something like “Bill should be slapped by the invisible hand.” I enjoy doing my taxes (I actually rather look forward to it), and I read business news a lot. Consequently, reading “The Khachapuri Index” has become a major part of my weekly routine, and I greatly anticipate the arrival of each new issue.

“The Khachapuri Index” is a weekly feature of the Financial provided by the ISET Policy Institute, a Tbilisi think tank connected to the International Economics School at Tbilisi State University. The Index’s purpse is two-fold:

  • First, it measures the cost of living across Georgia using the most ubiquitous of Georgian foods, khachapuri, specifically Imeruli khachapuri. The group uses prices of the items needed (flour, cheese, etc.) as well as the inputs (gas and electricity) needed to produce one khachapuri. Prices for both inputs and food items are tracked for cities across Georgia (Batumi, Kutaisi, Tbilisi, and Telavi) to provide more accurate results.
  • Second, each week a short lesson on an economic principle that relates to the current khachapuri price situation is included as well to help explain potential increases or decreases in the price. Recently, one lesson focused on the differences between seasonal and year-round milk production, and what such differences would do to the cost of a key khachapuri ingredient, cheese.

When I first discovered this part of the Financial, I questioned its authenticity. A lot. I read the disclaimer about the source of the information several times to ensure that what I was reading was legitimate. Once I concluded that it indeed was legitimate reporting, I remember thinking how ridiculous it was to track cost of living by khachapuri of all things.  However, after much contemplation, it makes a lot of sense. Regardless of location in Georgia or socio-economic status, khachapuri is a constant. Consequently, what better way to measure fluctuating prices and the cost of living for all Georgians than with the humble Imeruli khachapuri?

Moreover, it provides perspective for me as an outsider on just how much things cost for the local population in relation to their incomes. For many Georgians, one homemade khatchapuri could be 1/100th of their monthly income, and if they make even 1 a day a full third of their income could be going to khachapuri. Presently the cost of one khachapuri is just slightly over 3 GEL. (Approximately USD$1.80)  However, happily the price of khachapuri is dropping…at least according to “The Khatchapuri Index.” Hopefully, other components of the cost of living for Georgians will fall in a similar fashion.

(Ed.- And if you liked that, be sure to look into the Economist‘s Big Mac Index!)

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