Consumer Confidence January 2015

Consumer Confidence weakened in December. After increasing by 1.5% in the previous month, the Consumer Confidence Index (CCI) slumped 7.5% to 92.3. In particular, consumers are concerned by higher prices after the government hiked fuel prices in November. Overall, our survey shows that 83.5% of consumers cited rising foodstuff prices as a major concern in December or significantly higher than the 73.0% in November. Furthermore, the proportion of consumers who cited expensive fuel as a major concern increased to 53.0% in December from just 14.7% in November. Nonetheless, the sharp decline in the CCI in December should not come as any surprise given that consumer confidence has tended to deteriorate in the past following hefty hikes in fuel prices. In July 2013, for example, the CCI dived 9.3% after the government increased fuel prices in June 2013. Using the historical data as guidance, the CCI will rebound within the next 1-2 months after the fuel price hikes. The two main components of the CCI declined in December 2014. The first one – the component measuring consumer sentiment toward current conditions, the Present Situations Index (PSI), dropped 12.6 percent to 72.1, as sentiment toward the current state of the economy and job market deteriorated. The other component of the CCI - the one measuring consumer sentiment toward the future (the Expectations Index or EI) – declined 4.7 percent to 107.4, reflecting heightened concerns on how the overall economy will perform over the next six months. With consumers less optimistic on the country’s overall economic outlook, buying intentions for durable goods declined in December 2014. In our latest survey, some 34.0 percent of consumers expressed plans to purchase a durable good over the next six months. This is less than in the previous month - when some 35.2 percent of consumers expressed plans to purchase a durable good. Compared to July 2013 – a month after the government upped subsidized fuel prices in June 2013 - buying intentions for durable goods are, however, still relatively strong (the percentage of consumers expressing plans to purchase a durable good stood at only 31.8 percent in July 2013). http://dmia.danareksaonline.com/BeritaRiset/NewsReader/2015/01/3513/consumer-confidence-january-2015