Consumer Confidence On The Rise

KIEV, Ukraine -- Consumer confidence in Ukraine has crept back up into the positive, following a sharp decline last September, when political instability in the country was at a high for the year.

Kiev's Metrograd Shopping Center

According to a survey-based quarterly study conducted by the market research firm GfK-USM and the Kyiv-based International Center for Policy Studies (ICPS), the Consumer Confidence Index (CCI) rose to 103 in December, which is 7.6 points higher than figures from three months earlier.

“A CCI value above the 100-mark shows that positive consumer confidence prevails in Ukrainian society,” reads a statement released by the study team.

The surge follows the slip in consumer confidence that occurred last fall, when the government of Yulia Tymoshenko was dismissed. The December study figure is only four points lower than the all-time high reported last spring, when Ukrainians felt optimistism in the wake of the Orange Revolution.

It involved polling 1,000 individuals aged 15-59, an age group that represents 61.3 percent of Ukraine’s population and the country’s most active consumers. A representative sample is selected on the basis of gender, age and place of residence. The margin of error is 3.2 percent.

Experts say different factors have influenced the lift in Ukraine’s consumer spirit.

Evheniya Akhtyrko, senior economist with ICPS, attributes the surge to relative political stability and a seasonal factor: people generally have more positive expectations at the end of the year, she explained.

According to Akhtyrko, consumers are also more inclined to react sharply to short-term political changes, as happened during the fallout between President Yushchenko and the government last August.

“The rapidly renewed positive trend in the CCI indicates that the steep decline in September 2005 was more based on emotions than on real economic conditions,” said Akhtyrko.

The consumer confidence index, Akhtyrko suggests, was additionally influenced by a significant increase in Ukrainians’ disposable incomes. According to the State Statistics Committee, disposable incomes jumped almost 20 percent between January and November of last year.

According to the survey, the highest consumer confidence was registered in Western Ukraine and Kyiv, and the lowest in the country’s eastern regions, where the highest inflation forecasts and growing unemployment were also reported.

The positive trend primarily reflects the moods of families with average and above-average incomes. Among poorer Ukrainians, consumer confidence continues to deteriorate, the survey showed.

Akhtyrko predicts that consumer confidence will decline in the next couple of months due to the New Year’s gas crisis between Moscow and Kyiv, and volatile prices expected in the run-up to the March parliamentary elections.

Source: Kyiv Post