The CCI is catching up. After decreasing consumer confidence during the summer, the CCI rose by 4.7 index points in September (from -34.2 in August to -29.5 in September). Both the Present Situation Index and the Expectations Index moved upwards in tandem. The Present Situation Index increased by 3 index points, and the Expectations Index by 6.3. Notably, the Expectations Index has reached its highest level since the shock of the pandemic hit consumer confidence in March 2020. Consequently, while the overall CCI is still negative, it is still at its highest since March 2020 (Chart 1).
It is moreover worth noting the major factors behind the upward trend in CCI. As the data reveals, compared to August 2021, consumers are expecting to spend more money on major purchases (such as washing machines, personal computers, gas-stoves, refrigerators, and other household appliances) in the upcoming 12 months relative to the previous 12 months. Furthermore, consumers are considering increasing their savings at present and over the upcoming 12 months. This is potentially due to delayed demand within the pandemic period, which is gradually releasing under the social and economic recovery.
Regarding consumer expectations of the general economic situation over the next 12 months, the indicator reached its highest point after the pandemic induced fall (Chart 2).
Expectations regarding the future economic situation, as well as the general upward trend in the CCI, can both be explained by the municipal elections held on 2 October. Consumers may have established higher sentiments for the future, which translates into greater expectations among both Tbilisians and the rest of the population. Furthermore, daily COVID cases, after a peak in August, started to drop in September which may have influenced social behavior and sentiment.
Although the Index increased slightly, on the whole it is negative, while the Present Situation Index for Tbilisi worsened compared to August. The major reason for this decline in the Tbilisi Present Situation Index is growth in prices, as reflected by recent inflationary trends in the country. Even though the annual inflation rate fell from 12.8% in August to 12.3% in September, the indicator still remains significantly high, thus taking a toll on the Tbilisi population (Chart 3).