CCI July and August: Trend reversal in summer
29 September 2021

Consumer confidence decreases over summer. After the upward trend observed starting in April, consumer confidence fell in July and August to almost equal level, with a slight increase in August. In July, the overall index decreased by 2.3 points, from -32.1 in June to -34.4 in July. In August, it slightly increased to -34.2. Both the Present Situation Index and the Expectations Index followed the same pattern during these months (July and August) unlike what was observed in June, when Expectations had already started to go down (Chart 1).

The downfall in CCI observed in July and August can be explained by the increased inflation rate and worsened COVID situation in the country. Over the summer, the inflation rate rose to the highest value that has been observed over the past ten years. In July and August, annual inflation rates were at 11.9% and 12.8% respectively. Furthermore, by the end of July COVID cases started to increase sharply, reaching an all-time maximum of 6208 confirmed cases (with a rising share of Delta Variant cases among COVID patients) on the 17th of August. Also, starting from the end of July, the death rate started to rise and by the end of August, went up to 79 victims per day, an all-time maximum.

The slight increase observed in August could be explained by the progress in vaccination and positive changes in the tourism sector. The vaccination process has been moving forward and the total number of people vaccinated with at least one dose at the beginning of August was more than doubled by the end of the month. Also, according to Galt and Taggart, the number of total international arrivals increased by 510.5% in August of 2021 compared to 2020 and reached 24.5% of the total number observed in 2019.


It’s also interesting to look at how Overall CCI plays out between the capital and the rest of Georgia. In July, the CCI levels in the capital and the rest of Georgia almost matched, with Tbilisians having a slightly more negative sentiment (Chart 2). However, for August the indicators diverge: Tbilisians became more positive, while for the rest of Georgia CCI deteriorated. A possible explanation could be the upcoming elections that slightly lift the spirits and expectations among the Tbilisi population with hopes for a preferable change. At the same time, the worsened COVID situation probably hit the more vulnerable parts of Georgia outside the capital hard.