Consumer Confidence Index

Details: Created: 06 May 2015

After five months of consecutive decline, the consumer confidence index has finally increased – albeit only slightly. Although the insignificant (0.9 point) increase of the CCI can be classified as a stabilization of the index at the low point of the previous month, looking at the structure from different dimensions still offers insights into changes in consumers’ concerns over the month.

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Details: Created: 01 April 2015

After the sharp fall of consumer confidence that started from November 2014, the index showed only a comparably slight decrease in March. This might be a sign of the CCI’s stabilization at a low level. The present situation index decreased, albeit less than in the past several months, while the expectations index improved – primarily because of higher economic growth in February.

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Details: Created: 31 December 2014

December is a month when consumer confidence normally decreases. This is to be expected as the Christmas and New Year shopping period is one of the most expensive of the year. In 2014 the situation has not been much different, aside from the fact that the economy has experienced several economic fluctuations. The depreciation of the lari, as recently discussed in the ISET Economist’s Blog, must be one of the reasons for the large decrease in consumer confidence, but another cause might be the decrease in remittances from abroad. In November, a 16% fall was observed in money transfers – especially for remittances from Russia, which saw a 30% decrease compared to November 2013. This might be one of the primary drivers of the CCI decrease. The answers the respondents gave to the different questions supports this idea. More people responded that prices have increased and the economic situation has become worse in the country. Although both the Present Situation and Expectations indices have decreased overall, the expectations of respondents from Tbilisi shows the opposite pattern. The overall CCI has decreased to -22.5 points (down by 4.0 points from November). The Present Situation index had a sharp decrease to -26.4 (down by 5.9 points) and was the main driver of the overall decrease in consumer confidence. The Expectations index also decreased to -18.5 (down by 2.2 points), but its decline was much smaller than that of the Present Situation index.

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CCI Methodology

The ISET Consumer Confidence Survey follows the standard EU methodology (see Useful Links): we randomly sample 300-350 individuals on a monthly basis and question them about the past, current and future financial situation of their families and the country as a whole.Consumer confidence is the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation. How confident people feel about stability of their incomes determines their spending activity and therefore serves as one of the key indicators for the overall shape of the economy. In essence, if consumer confidence is higher, consumers are making more purchases, boosting the economic expansion. On the other hand, if confidence is lower, consumers tend to save more than they spend, prompting the contraction of the economy. A month-to-month diminishing trend in consumer confidence suggests that in the current state of the economy most consumers have a negative outlook on their ability to find and retain good jobs. Read more