Consumer Confidence Rises 1.2% in February Amid Recession and Inflation Fears

The Consumer Confidence Index (CCI) of the Torcuato Di Tella University (UTDT) increased 1.2% compared to the January measurement. This is the first increase since Javier Milei took office after two consecutive falls. Despite this month’s rise, the index registers a year-on-year decrease of 0.39%.

In January, the same index had plummeted 10.2% and sank 16.2% in December.

Consumer confidence increased alongside an inflation estimate of 15% for this month. According to the EcoGo survey, Inflation is set to close the month at 15.9%, nearly five percentage points below the 20.6% that INDEC recorded in January. The Libertad y Progreso Foundation predicts a monthly rate of 16.8%.

Concurrently, the recession deepens. According to the Orlando Ferreres y Asociados activity estimator, There was a 3.8% drop in January. “The government plan, in an environment of currency shortage, will have recessionary effects in the first months of 2024, and the numbers will only improve when the thick harvest arrives. In this way, a more substantial improvement will only happen if inflation is reduced and exchange controls are eliminated,” they point out.

In the UTDT index the increase in confidence was not generalized. In the Interior the monthly increase was 6.9% and in CABA it was 3.11%, but in GBA a drop of 3.18% was recorded.

By educational level, a proxy for income level, a monthly increase of 5.7% is recorded for individuals with a higher educational level, and a drop of 1.44% in those at low level.

Among the subindices that make up the CCI, the increase is mainly due to Durable Goods and Real Estate, which rose 15.7% compared to the previous month, while the Macroeconomic Situation subindex remained stable, -0.22% and The Personal Situation fell 2.19%, always compared to the previous month.

Finally, perceptions regarding the term show that Present Conditions increased by 3%, and Future Expectations increased by 0.6%, always compared to the month of January.

Less trust in the president

This rebound in consumer confidence occurs as another UTDT survey shows that trust in the government drops.

In the last month, Confidence in President Javier Milei fell 1.4%according to the Government Trust Index (ICG) of the UTDT School of Government. This decline was accentuated among young people and people with less education: the drop reached 27.2%against 2.6% in the segment between 30-49 years old and 9.2% among those over 50 years old.

The current level of trust is 10.1% lower than the measurement in February 2016 at the beginning of Mauricio Macri’s government, and 13.3% higher than the measurement in February 2020, at the beginning of Alberto Fernández’s administration.

Comparing starting periods, the average value of the ICG in the period December 2023 to February 2024 is 3.1% higher than the average value recorded between December 2016 and February 2017 (first months of the Macri administration) and 22.6% higher than the average value recorded between December 2019 and February 2020 (first months of the Fernández administration).

In relation to the level of education, The drop is 33.6% in the segment with primary education, against a drop of 15.9% in the group that reached secondary education and 3.1% in the segment that reached tertiary and/or university studies.

The variation of the ICG compared to January It was negative in four of its five components: General evaluation of the government (-5.1%), Concern for the general interest (-4.8%), Efficiency in the administration of public spending (-0.1%), Ability to solve the country’s problems (-1 .6%). Finally, the variation of the ICG compared to January was positive in the measurement of the Honesty of officials (3.7%).

Just like in December and January, The ICG for February recorded its highest value among those who live in the interior (2.86 points, with an increase of 1%). Next are those who reside in CABA (2.28 points, with a drop of 5%) and finally, those who reside in GBA (2.08 points, with a decrease of 5%).