- Colombia: During October, consumer confidence significantly rebounded amid a better assessment of current and future conditions
The Consumer Confidence Index (CCI) stood at -3.7 percentage points in October 2024, increasing 12.3 ppts compared to September and 10.3 ppts compared to October 2023 (chart 1). The result showed an improvement in both of its components, as people have better consumer expectations and economic conditions, but the CCI improvement is mainly attributed to the Economic Conditions Index (ECI).
The Economic Conditions Index broke its downward trend, going from -25.4 ppts in September to -8.0% in October, an increase of 17.4 ppts. The willingness to buy furniture and household appliances increased to -5.3 ppts and reached the highest level since August 2019, while the perception of the household’s economic conditions vs. their conditions one year ago also improved by 9.4% to -10.6% (chart 2). It is worth noting that in recent months, retail sales expanded faster-than-expected as the discount temporarily increased the consumer’s appetite. Another important characteristic is that despite the better appetite, the dynamic in consumer credit is still moderate, probably showing that this first step of the recovery on the consumption side is using savings.
The expectations index improved by 9 ppts compared to September, reaching -0.8%. This component’s improvement is explained by better expectations about having good times in the forthcoming twelve months for households and the country. It is relevant to note that expectations about the future show a positive index for households, while the country’s future condition assessment is still in negative territory.
All components of the CCI improved in October compared to September and Q3-2024, showing a better disposition of buying durable goods, houses, and vehicles. BanRep’s easing cycle could keep improving the index which is in its highest level since August 2022. Recent positive surprises in inflation could contribute to a greater consumer confidence, especially with the downtrend in core inflation, however fiscal risks could deteriorate the expectations component.
Looking at the October details:
- The Consumer Expectations Index increased to -0.8%, showing a 9 ppts increase from the previous month. Consumers kept their optimism about their economic conditions improving by increasing it from 15.1% in September to 21% in October. At the same time, their expectations that economic times will generally be good increased by 18.5 ppts to -11.9% being a higher balance than October 2023 (-16.1%).
- The Economic Conditions Index reached a -8.0% in October, increasing 17.4 ppts from the previous month. Consumers’ perception of their current economic conditions improved with the willingness to buy furniture and household appliances to -5.3%. Also, consumers improve their perception of being in a worse economic situation from a year ago.
- The willingness to buy durable goods improved 16.8 ppts compared to the third quarter of 2024, reaching -5.3%. Also, willingness to buy a house increased by 19.4 ppts in October compared to the previous month in all cities except Bucaramanga, which reflects a better demand in the housing sector, while willingness to buy vehicles increased 8.9%, however its still low with a -48.5% balance.
- All socioeconomic levels improved their Consumer Confidence Index (ICC). In October, confidence in the middle-income level almost reached a positive terrain with -1.8% balance. The low-income level increased by 14.4 ppts to -2.8%, while the high-income level improved to -30.9%.
—Jackeline Piraján & Carlos Felipe Cruz
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