February 2023 | CCI: Consumer confidence declines
30 March 2023

Decline in the CCI. Consumer confidence decreased by 5.9 index points  from -28.1 in January to -34 in February. Both the Present Situation Index and the Expectations Index contributed to the decrease, with the Present Situation Index dropping by 3.8 index points and the Expectations Index by 8.1 points (Chart 1). 

Consumers appear largely concerned about the expected general economic situation in the country, unemployment levels, and savings. At first glance, this seems counter intuitive as inflation rates have more or less stabilized compared to previous months (annual inflation came down to 8.1% in February from 9.4% in January). Given that the declining trend in prices is relatively new, there might be a lag in the impact of these falling prices on consumer sentiment; consumers may still consider prices as high due to the extended period of inflation. This could help explain the unwillingness to make savings, where inflation produces two contradictory consumer impulses: to buy before prices rise further and to save. If there are expectations of an even higher rate of inflation, consumers might prefer to make certain purchases immediately and therefore to save less.

As for unemployment, even though consumer perceptions are more negative than in January, overall, the trend has been positive over the last couple of months.

The CCI declined both for Tbilisi residents and for people from the regions. However, the decrease was higher for the regional population. For residents of the regions, the CCI declined by 7.4 index points, while for Tbilisians, the decrease was 4.4 points. This is a common trend, where the CCI in the regions is typically lower than in Tbilisi due to higher vulnerability to prices.

BAR CHARTS: Consumer Responses by Questions