The CCI is falling again. After the increase of consumer confidence in September, it dropped to a level similar to June, before the trend had reversed over the remaining summer months. The CCI decreased from -29.5 in September to -32.5 in October, with both the Present Situation Index and the Expectations Index moving downwards. The Present Situation index reduced slightly – by 0.7 index points, with the Expectations Index decreasing by 5.2 points (Chart 1).

In September, the major contributors to the increasing CCI were people’s expectations regarding major purchases (such as washing machines, personal computers, gas-stoves, refrigerators, and other household appliances) within the upcoming 12 months, relative to the previous 12 months, and how they felt about making savings presently and over the upcoming year. In October, these very questions also led to an observable reduction in the Index. Therefore, to follow the linkages between the questions and delayed demand proposed in the previous report, it seems that by October delayed demand had run out or been temporarily held back by consumers.

From a broader perspective, there can be several factors contributing to decreased sentiment from the population. Firstly, the municipal elections likely dampened people’s expectations; the tense political situation may have raised concerns over economic conditions going forward, which potentially explains lower expectations. As for the pandemic situation, Georgia entered its fifth wave of COVID-19 in October, where the number of cases and the death rate began to rise in the middle of the month. This could have contributed both to people’s decreasing perceptions of the present as well as the future financial situation and to their expected spending. Last but not least, inflation reverted to its highest point (12.8%) in October, with increased oil and food prices being major contributors, which placed additional pressure on households.

Over the last two months, consumer confidence for Tbilisi and the Rest of Georgia have remained at relatively similar levels since the divergence observed in August (Chart 2).