Georgian PM says prices could be reduced through greater social responsibility of businesses

Georgian Prime Minister Irakli Kobakhidze on Monday said food prices could be reduced if businesses, including distributors and retail chains, act with greater social responsibility.

Kobakhidze noted that while businesses were naturally profit-oriented, there remained room to lower prices through socially responsible practices.

He added that since 2012 the amount paid into the state budget as personal income tax has increased 4.7 times, and this data, he emphasiსed, is not subject to manipulation.

“People now earn nearly five times more income and pay 20 percent in income tax. Under such conditions, the share of household spending on food should realistically have decreased, but it has not. This leads us to conclude that there is a real resource for reducing prices”, Kobakhidze stated.

He further addressed the expansion of retail chains, saying that while one or two neighboring stores may not pose a problem, excessive network expansion increases distribution costs.

The PM noted that information provided during meetings indicated that in many cases, nearly half of newly opened stores operated at a loss.

“The networks pursue expansion in order to capture as much of the market as possible and replace other stores. They expand by increasing prices, taking additional funds from citizens’ pockets, and using these resources to grow their networks. Ultimately, this leads to higher prices”, he said.

Kobakhidze further recalled that cashback schemes initially started at around 4 percent and in some cases rose to as much as 50 percent.

“Business must, of course, be free - this is our starting point, and we take pride in it. Since 2012, this situation has changed. However, there is also social responsibility. It is one thing for a business to be maximally profit-oriented, but I believe that if businesses - including distributors and retail chains - act with social responsibility, it will be possible to reduce prices”, he concluded.