Just as the flu season was making its annual rounds in Georgia, the consumer confidence index also appears to have suffered from a bout of “winter blues”. In January 2016 the index has declined after a large monthly increase in December 2015. Although the index has dropped significantly compared to the previous month, the increasing trend that began in October 2015 has been sustained. Both components of the index – the present situation and the expectations - have declined, however the most evident worsening was observed in answers related to expected changes in the country’s economy.

In January, the consumer confidence index fell to -37.1 points (a 6.7 point decrease from December 2015). The present situation component of the index declined by 5.9 points, reaching the -48.2 point mark. The expectations component fell even further  by 7.6 points, reaching the 26 point mark.

Answers to different questions showed some of the main reasons behind the CCI’s decline in January. From the perspective of the present situation component, the main contributors to the worsening of consumers’ mood are the following: financial situation of the household, evaluation of general economic situation in the country and readiness to make major purchases.

More specifically, in terms of the present situation, the reasons for January’s decline were as follows:

1. The share of respondents assessing their household’s financial situation as having worsened over the past 12 months increased from 39% to 49% month-on-month.
2. The share of respondents answering that the economic situation over the past 12 months had worsened a lot increased from 36% to 44% in January.
3. The share of respondents who thought it was not the right moment to make major purchases increased from 33% to 41% month-on-month.

As for consumers’ expectations, the main concerns were related to the future economic situation in the country, inflation, unemployment and the households’ ability to make major purchases in the upcoming 12 months. Here are some insights from January’s CCI data:

1. The share of respondents expecting the general economic situation in the country to get worse in the upcoming 12 months increased from 11% in December to 22% in January.
2. The share of respondents expecting prices to increase more rapidly over the next 12 months has increased from 11% to 23% month-on-month.
3. The share of respondents expecting the general economic situation in the country to worsen has increased from 29% to 39% month-on-month .

These particular answers to survey questions might be reflecting the impact of the seasonal decrease in customer activity after the New Year period. The pattern of decrease is similar across all major population groups covered by the survey.
The table below summarizes the monthly consumer confidence index changes across the different age, gender and education strata:

REGIONAL PECULIARITIES

The CCI decreased in both Tbilisi and the rest of Georgia (RoG). Consumer confidence decreased significantly in Tbilisi (by 5.9 points) reaching -34 points. A larger decrease was observed in the RoG (by 7.2 points) reaching -39 points.

In Tbilisi, responses to a number of survey questions worsened. Specifically, residents of the capital are concerned about the financial situation of their household, the present and future economic situation in the country, inflation and unemployment in the future. Considering the seasonal context, a decline was also seen in their readiness to make major purchases. In particular,

• The share of respondents from Tbilisi saying that the financial situation of their household had got worse increased from 36% to 48% month-on-month (MoM).
• The share of respondents assessing the economic situation in the last 12 months to have gotten a lot worse has increased from 30% to 42% in January. Expectations about the worsening of economic situation has increased as well from 12% to 21% MoM.
• The share of respondents expecting prices to increase more rapidly in the next 12 months has increased from 8% to 18% in January.
• The share of respondents expecting unemployment to increase in the next 12 months has increased from 23% to 37 MoM.  
• The share of respondents answering that it is not a good moment to make major purchases has increased from 21% in December to 31% in January. Similarly, the share of respondents from capital saying that they will spend less in the next 12 months on major purchases has increased from 52% to 68% MoM.

Similar to Tbilisi, the respondents from the rest of Georgia (RoG) are concerned about the present and expected changes in the country’s economic situation. Expectations about inflation, unemployment and making major purchases were the primary driving forces behind the CCI decline in the RoG. Specifically,

• The share of the respondents saying that economic situation has gotten worse over the past 12 months has increased from 56% to 66% MoM.
• The share of respondents expecting economic situation to get worse in the next 12 months has increased from 11% to 22% in January.
• The share of respondents expecting prices to increase more rapidly in the upcoming 12 months has increased from 13% to 25% MoM.
• The share of respondents expecting unemployment to increase sharply in the next 12 months has increased from 9% to 18% MoM .
• The share of respondents expecting to spend less on the major purchases in the next 12 months has increased from 59% to 69% in January.