How Consumer Indexes Are Calculated

In Ukraine, the Consumer Confidence Index is determined through a random survey of the country’s population; the survey includes 1,000 people aged from 15 to 59. The people of this age make up 61.3% of the Ukrainian population, and they are the most active consumers. The survey sample is representative by gender and age, and it also accounts for the type and size of settlement. Statistical deviation does not exceed 3.2%.

To define the CCI, respondents are asked the following questions:

1. How has the financial position of your family changed over the last six months?
2. How do you think your family’s financial position will change in the next six months?
3. Speaking of the economic conditions in the country as a whole, do you think the next twelve months will be a good or bad time for the country’s economy, or something else?
4. And if we are to speak of the next five years, will they be for the country’s economy a good or bad time?
5. Speaking of large purchases for the home, do you think it’s generally a good or bad time to make those purchases now?

With regard to these questions, the corresponding index is calculated:

• index of current personal financial position (x1);
• index of expected changes in personal financial position(x2);
• index of expected economic conditions in the country within the nearest year (x3);
• index of expected economic conditions in the country within the nearest 5 years (x4);
• index of propensity to consume (x5).

Indices are constructed in the following way: from the portion of positive answers the portion of negative answers is deducted, and to this difference 100 is added in order to eliminate the appearance of any negative values. On the basis of these five indexes, three aggregate indices are calculated:

• consumer confidence index (CCI)—arithmetic average (AA) of indices x1–x5;
• index of the current situation (ICS)—AA of indices x1 and x5;
• index of economic expectations (IEE)—AA of indices x2, x3, and x4.

Index values range from 0 to 200. The index value equals 200 when all respondents positively assesses the economic situation. The index totals 100 when the shares of positive and negative assessments are equal. Indices of less than 100 indicate the prevalence of negative assessments.

To determine the Index of Expected Changes in Unemployment (IECU) and the Index of Inflationary Expectations (IIE), the respondents are asked the following two questions:

1. Do you think that within next 12 months the number of unemployed (people who do not have job and are looking for it) will increase, will remain roughly the same, or will decrease?
2. Do you think that the prices for major consumer goods and services will change in the next 1–2 months?

The IECU and the IIE are calculated in the following way: from the portion of answers which indicate the growth of unemployment (inflation), the portion of answers which indicate the decrease of unemployment (inflation) is subtracted, and to this difference 100 is added to eliminate the appearance of negative values. The values of indices can vary within the range of 0 to 200. The index totals 200 when all residents expect an increase in unemployment (inflation).

ICPS publications

	Quarterly Predictions
	Political Commentary
	Economic Statistics
	Consumer Confidence
	ICPS Newsletter
	Local Governance Brief
	Regional Trends
	Policy Studies
	Transition

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Yevhenia Akhtyrko
Chief Economist
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phone: (380-44) 484-4403

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Andriy Starynsky
Marketing Communications Manager
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phone: (380-44) 484-4410