The CCI deteriorated in March. We had hoped that the recovery of the Consumer Confidence Index, observed since December 2020, would bring the Index back to the levels observed last summer. Unfortunately, the trend reversed in March and the CCI decreased, from -35.5 in February to -39.0 in March. Both sub-indices (the Present Situation Index and the Expectations Index) also followed the same pattern (Chart 1).

Chart 2. CCI by Question

What happened (Chart 2)? According to a recently released report from the National Statistics Office of Georgia, inflation rose to 7.2% in March. While this is not, as such, an exceptionally high number, it is the highest rate since 2019. It has also affected some important components of the consumer basket, as prices rose on food, healthcare, and utilities by 5.7%, 7.6%, and 13.6%, respectively. In addition, the utility bill subsidy ended in February, even though March was a chilly month. Looking closely at each component of the Index, we further noted that questions related to inflation (past and expected) largely caused a decline in the overall Index. With less purchasing power, people were also more skeptical about their ability to save. Finally, it seems significant that respondents also became more negative about their employment prospects, though there is no hard evidence to support this.

In addition to these economic factors, the death of a young nurse soon after vaccination was a stark reminder of the continuing COVID crisis. Ironically, this slowed the vaccine rollout and, if anything, will delay the economic recovery.

There was no noticeable difference in patterns between respondents living in Tbilisi and those outside the city (see Chart 3).

BAR CHARTS: CONSUMER RESPONSES BY QUESTIONS