A slight increase in CCI: Consumer confidence has increased by 0.7 index points – from -31.1 in May to -30.4 in June. The Present Situation Index remained at a similar level with an increase of just 0.2 points, while the Expectations Index rose by a more tangible 1.1 points (Chart 1).
One factor that contributed to this rise was how people viewed the change in the general economic situation within the current period, which increased by 7 index points. Generally, until this stage, consumers have evaluated the situation extremely pessimistically, and the indicator has been sustaining very low levels after the hit of the pandemic. However, this downward trend reversed in June. Additionally, consumers’ views towards future price changes also improved by 7 points. This moreover appears to indicate recovery of the indicator after hitting one of its lowest points since the start of the pandemic in May. Last but not least, higher sentiment is seen with regards to expected unemployment (a 6 point increase). The factors most fueling the upward trend in consumer confidence are the country’s notable growth of export, remittances, and income from tourism.
Although the index showed overall growth, there was a decline in certain indicators. A rather significant drop is seen in people’s perception as to whether now is a good time to make deposits, which deteriorated by 10 index points. One possible explanation for this might be that people assume it is reasonable to invest in housing, start businesses, etc., due to anticipation of higher inflation rates. According to the National Bank of Georgia (NBG), the forecasted inflation rate for the 3rd and 4th quarters of 2022 are 10.85% and 10.19%, respectively.
Consumer confidence among residents outside Tbilisi grew by 3.4 index points, whereas the sentiment of Tbilisians declined by 2.1 points, thereby closing the pre-existing gap between the two sub-indices. People from the regions seem less concerned about current prices than they were in May. They are also relatively more optimistic about expected employment levels and the country’s general economic situation. This could be explained by the increased agricultural production seen recently. As for Tbilisians, currently and over the next 12 months, they are more concerned about depositing money for savings, and perceptions towards their personal financial situations declined from the upturn in May. This again can be explained by the emergence of more favorable alternatives, alongside a high inflationary trend that increases current demand, while also awaiting a further increase in prices.
BAR CHARTS: Consumer Responses by Questions