Tashkent, Uzbekistan (UzDaily.com) – The Consumer Confidence Index (CCI) in Uzbekistan fell for the third consecutive month in June 2024. However, the rate of decline slowed, amounting to only 0.9 points, which resulted in a new record low for the CCI in Uzbekistan—now at 125.9 points. 

This decrease was observed in only three out of five sub-indices. Despite this, a significant drop in forecasts for the economic situation and assessments of personal financial status outweighed a slight increase in positivity in the remaining two areas.

The sub-index for economic situation forecasts over the next 12 months dropped by 3.6 points, reaching a record low of 148.1 points. Currently, 61.4% of Uzbekistan’s residents believe the economic situation will improve, down from 62.8% in May.

Regionally, a notable decline was observed in the Surkhandarya region, where the percentage of respondents choosing positive responses fell from 69% to 58.9%. The Namangan region emerged as the leader this month with 68.6% of optimists. Tashkent, despite a slight increase in the index from 48.2% to 51.2%, remains the lowest, trailing by 5.1 percentage points behind the Syrdarya region.

The second largest decline in June was in the assessment of personal financial status over the past 12 months. This sub-index fell by a modest 1.8 points to 126.6 points, marking the second-lowest level recorded. 53.8% of Uzbekistanis believe their personal financial situation has improved, down from 56.9% in May.

Regionally, the Syrdarya region saw the most significant change, with the percentage of those noting an improvement in personal financial status dropping from 61.4% to 51%. Tashkent remains the lowest performer, despite a slight increase, with 47.5% of positive responses. This is only marginally lower than the Samarkand region. The Khorezm region led with 61.8%, though this is 3.4 percentage points lower than in May.

Inflation expectations among Uzbekistan’s residents continued to decrease for the second consecutive month. Inflation assessments have approached March levels before the removal of the zero VAT rate. Over the past year, 44% of residents experienced very high price increases, down from 48.5% in May. For the past month, the proportion of those experiencing significant price increases fell from 27.7% to 22.2%. Inflation expectations also dropped significantly in both time frames, reaching new absolute lows. The percentage expecting strong price increases in the next month decreased from 13.2% to 10.5%, while 24.8% expect faster price growth over the next year, down from 28.1% in May.

Official statistics recorded a 0.2% monthly deflation in June. However, annual inflation slightly accelerated from 10.55% to 10.6%. After a sharp rise in prices in May, June saw a more moderate impact due to seasonal declines in fruit and vegetable prices, which likely positively affected sentiment. Vegetables dropped in price by 13.9% month-on-month, and fruits and nuts by 4.8% month-on-month. Consequently, in terms of the most significantly increased prices, fruits and vegetables showed the most positive result ever recorded, with only 17.2% of respondents choosing this option, compared to 23.6% in May and 43% last July. Nevertheless, the previous troublemakers—housing services and medicines—continue to top the list.

In May, 44.1% of residents noticed a significant rise in housing service prices, which reached a new record of 50.4% in June. For medicines and pharmaceuticals, the indicator rose from 29.5% to 32.2%. The category "Meat, poultry" remains in second place with a 42.2% share. There was also a partial recovery in the proportion of those who noticed an increase in gasoline and fuel prices, from 19.4% to 23.2%, likely due to a 11.9% month-on-month rise in methane prices.

In June, devaluation expectations among Uzbekistan’s residents continued to decline, reaching record lows for the entire study period. The proportion expecting the soums to weaken against the dollar over the next 12 months fell from 63.4% in May to 56% in June. The percentage of pessimists over a one-month horizon also decreased from 43.5% to 35.7%. The Uzbek soums has strengthened for the third consecutive month, a trend last observed two years ago, which positively impacted public sentiment.

Uzbekistan is the only country that showed increased pessimism compared to May, with the CCI hitting a record low and declining for the third consecutive month. However, the decrease was minor, and respondents showed increased positivity on two of five questions. The most significant deterioration was in the forecasts for the economic situation over the next 12 months. This occurred against the backdrop of the removal of the zero VAT rate on housing services and medicines, which led to a recent acceleration in inflation. However, the seasonal drop in fruit and vegetable prices in June and overall monthly deflation likely contributed to the reduction in inflation assessments and expectations, significantly improving these parameters and nearly reaching March levels.

Devaluation expectations in Central Asian countries also displayed mixed trends. In Uzbekistan, they decreased, with the proportion of people expecting a weakening of the national currency in various time frames dropping sharply by 7.4–7.7 percentage points, reaching record lows. The CCI dynamics in Uzbekistan remain negative and now significantly lag behind Kyrgyzstan, where the consumer confidence index has reached new records. Continued acceleration of annual inflation in Uzbekistan could lead to further negative dynamics in the CCI.

Daniyar Orazbaev, Analyst at Freedom Finance Global, said: “June 2024 has generally been positive for Central Asian countries. Kazakhstan has seen a notable increase in the Consumer Confidence Index (CCI), which has confidently surpassed the neutral 100-point mark for the first time since January. The most significant improvement is observed in the assessment of the national economic situation and the favorability of conditions for major purchases. Although still a few points short of the November 2023 record, June’s result is the third highest in the 22-month data collection period. Kyrgyzstan has also seen a significant rise in the CCI, setting a new record and securing the second position in the region, surpassing Uzbekistan by more than 10 points. This achievement is largely due to a new record in the favorability of conditions for major purchases. Now, the majority of Kyrgyzstan’s residents express a positive view on this issue, setting an absolute record for the entire research period in Central Asia. Tajikistan, the leader in the Consumer Confidence Index, remains stable.”