Agflation and other modifications of inflation (the cases of Georgia and its neighboring countries)

Abstract

The article explores the agflation index and other modifications of the inflation index using examples from Georgia and its neighboring countries. The findings showed that a traditional inflation index fails to fully reflect the problems caused by price changes, especially for poorer populations in developing countries. Therefore, new instruments need to be identified. The article suggests using the munflation index for observing changes in prices. The munflation index consists of agflation, utilities expenses and health care expenses incurred. The article shows that applying the munflation instrument along with the inflation index allows us to have a clearer picture. These indices do not exclude but complement each other.