Consumer confidence deteriorated in April, for the first time since last Autumn, possibly impacted by developments in Cyprus. However, in the present circumstances, a question remains about the significance of the decline recorded in the current month, namely, whether it marks the beginning of a reversal of the trend or constitutes a conjunctural development.
The Consumer Climate Index – CCI (55.7) fell sharply, by 4.8 points, relative to March. Its marked decline is reflected by the simultaneous drop in both of its component indices. More specifically, the Current Economic Conditions Index – CECI (38.8) fell by 3.6 points, whilst the deterioration of the Consumer Expectations Index – CEI (67) was even greater (-5.7 points relative to the previous month).
November 2012 marked a turning point for consumer confidence. For three months (11/2012 – 1/2013), the relevant index rose considerably (+14.7 points) to reach 60 points at the beginning of 2013. The index subsequently stabilized at these levels during the first quarter of 2013. However, despite the sharp drop in April, the index retains to a large extent the gains recorded over the last five months, since its current value (55.7) remains much higher than the corresponding value last November (46.4).
Propensity to buy (64.6) declined (-4.3 points) relative to March. Only 1 in 4 consumers (27%) believes that the current period is appropriate for major purchases of household equipment (furniture, electrical appliances, etc.). Assessments of personal financial situation (13) registered a marginal decrease (-2.9 points).
Dissatisfaction with the economic situation among households continues to be almost universal, with 9 in 10 citizens (88%) reporting that their personal financial situation deteriorated during the past 12 months. Optimism about the future declined even more steeply. Expectations for the economy (54) reverted to the levels of December 2012, registering a drop (-6.2 points) relative to the previous month. Expectations for the economy over the next five years (99.1, -12.1 points down relative to March) fell below the ‘psychological’ 100-point mark for the first time since November. This means that the number of those giving negative responses (38%) regarding the economy’s long-term prospects continues to be – albeit marginally – higher than those giving positive responses (37%). Expectations of personal financial situation (47.7) is the only one among the five CCI indices to register a monthly rise (+1.2 points).
Citizens’ expectations for unemployment showed a slight improvement for the second consecutive month. Nevertheless, 75% of respondents (-3% relative to February) anticipate a further increase in unemployment over the next 12 months.
In the wake of developments in Cyprus, the expectations of citizens for saving present particular interest. The proportion of citizens who consider it likely that they will be able to save some amount of money in the year ahead is just 4%, equaling the 65-month (12/2007 – 4/2013) historical low that was recorded in April 2012.
