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The Consumer Confidence Index and its components

13-10-2009

The Consumer Confidence Index (Polish acronym: WOK) is based on questions placed in a monthly survey that has been conducted since December 1991. The population studied are inhabitants of Poland age 15 or over. The survey is conducted on a representative sample of 1000 persons.

The respondents evaluate the country's situation, their own material circumstances, the level of unemployment, inflation, their willingness to buy durable consumer goods and level of savings over the last 12 months; they also state their expectations in all these areas for the next 12 months. Ever since the beginning of this survey, the same questions have been asked in the identical wording and order.

The questions that form the basis for calculating the level of CONSUMER CONFIDENCE (IWO):

  1. How do you evaluate the change in the economic situation in Poland over the last 12 months?
  2. How do you think the economic situation will change in Poland over the next 12 months?
  3. How do you evaluate the material situation in your home when you compare it to 12 months ago?
  4. How do you think the material situation in your home will
    be in 12 months?
  5. Do you think that currently it's a good time to buy
    durable goods?

The questions that form the basis for calculating the level of ECONOMIC CLIMATE (IKG):

  1. How do you evaluate the change in the economic situation in Poland over the last 12 months?
  2. How do you think the economic situation will change in Poland
    over the next 12 months?

The questions that form the basis for calculating the level of WILLINGNESS TO BUY (ISZ):

  1. How do you evaluate the material situation in your home when you compare
    it to 12 months ago?
  2. How do you think the material situation in your home will be in 12 months?
  3. Do you think that currently it's a good time to buy
    durable goods?

Responses to these questions are encoded. Positive/ optimistic responses are assigned a value of 200, while negative/ pessimistic responses are assigned a value of 0. Neutral responses such as "no opinion", "hard to say", "it won't change" are assigned a value of 100.
The indices are calculated from the arithmetic average of all the responses to the questions that form the basis for the given index.

The equations for calculating each index are as follows:

IWO = (X1 + X2 + X3 + X4 + X5) / 5
IKG = (X1 + X2) / 2
ISZ = (X3 + X4 + X5) / 3

The diagram presents the values of these three indices over a 2-year period. When a majority of responses are positive, an index exceeds 100; when a majority are negative, an index is below 100.