The upward trend continues. The Consumer Confidence Index experienced further growth of 3.1 index points – from -19.5 in September to -16.4 in October. This time, the Present Situation Index led the increase by shifting upwards 5.5 points, while the Expectations Index rose more moderately, by 0.5 points.

What drove the trend? One of the most evident M-o-M positive shifts can be observed in consumers’ financial standing. In October, more respondents stated that they were managing to make ends meet and fewer would need to run into debt (the share of consumers going into debt fell from 31% to 17%). This observation is true for both residents in the capital and those in the regions, although it is more prominent in the case of the latter. This may be attributable to the Autumn harvest period when people generate income selling their produce. Moreover, consumer sentiment towards making major future household purchases has increased, which might equally be connected to the income generated during the season

Besides these positive shifts, there was also a notable decrease in consumer sentiment towards future price levels. Such increased skepticism could be driven by news of Russia limiting exports of petroleum products to Georgia. Within economic theory, expectations concerning inflation play an important role in driving actual inflation – where consumers base their financial decisions, among other factors, on such expectations. As such, when consumers expect high inflation, they may begin to make additional purchases immediately to avoid the expected higher prices in the future. This drives the demand for goods upwards, creating pressure for prices to rise. However, it’s worth noting that these expectations towards increased prices should be high enough for consumers to consider changing their spending habits, which might not be the case for Georgia yet.

Tbilisi vs. the regions. The CCI improved for both Tbilisians and residents throughout the rest of Georgia. In the case of Tbilisi, the increase reached 2 index points, while for the regions it was 3.8. Despite positive trends, a significant gap in sentiment remains between the two, thus indicating inequality between the capital and the regions.

Note: Starting in July, the CCI underwent minor shifts in methodology. Specifically, the questionnaire was slightly modified, in terms of how questions were formulated when conducting a survey.