Markets

Charted: The Global Decline in Consumer Confidence

Published

1 year ago

February 12, 2023

Gilbert Fontana

Featured Creator

Article/Editing:

Freny Fernandes

Declining Global Consumer Confidence in 2022

Charting the Global Decline in Consumer Confidence

Our plans to buy new things, travel, invest, and save money, all rely on one crucial factor—our ability to pay for it.

This ability in turn is dependent on not just our current savings, but our expected income and confidence in the economy, i.e. consumer confidence.

This graphic by Gilbert Fontana uses OECD data from 2019‒2022 to chart the rise and fall of consumer confidence in nine major economies.

What is Consumer Confidence?

Measured at a base value of 100, the Consumer Confidence Index takes consumers’ expectations and sentiments about their financial futures into account to indicate household consumption and saving patterns in the future.

An indicator above 100 means that there is a boost in people’s confidence towards economic prospects. This means that they are less likely to save and more inclined to spend money in the near future.

On the other hand, a value below 100 indicates that consumers are pessimistic about their economic standing in the future. This can result in them saving more and spending less.

Inflation, job losses, and expectations of a not-so-bright financial future can shake this confidence, making consumers think twice about their consumption.

Global Consumers are Becoming Pessimistic

After falling down and quickly recovering during the COVID-19 pandemic in 2020, consumer confidence seems to be trending downwards across the globe.

Country	Consumer Confidence (Oct 2021)	Consumer Confidence (Oct 2022)
🇫🇷 France	100.8	96.5
🇩🇪 Germany	101.1	95.9
🇮🇹 Italy	102.8	96.8
🇯🇵 Japan	99.0	96.7
🇬🇧 UK	100.7	91.6
🇺🇸 U.S.	98.1	96.8
🇨🇳 China	103.2	92.1* (Sept 2022)
🇦🇺 Australia	100.4	98.0
🇰🇷 South Korea	100.7	98.3

The UK was hit the worst as its Consumer Confidence Index (CCI) dropped down to 92 in 2022, from 100.6 in 2021. Just behind is China, which also fell to 92 in 2022 despite sitting at 103 two years prior.

The remaining countries had CCIs between 96‒98, including France, Germany, and the U.S.

Even with the most optimistic populations and a CCI of 98, South Korea and Australia, were below the ideal 100 mark and indicated pessimism.

The main culprits of this declining confidence in global economic markets including expectations of rising inflation—especially for food and gas—as well as high interest rates, the threats of a looming recession, and layoffs in major sectors.

To learn more about confidence and predictions for the upcoming year, check out Prediction Consensus: What the Experts See Coming in 2023.

This article was published as a part of Visual Capitalist's Creator Program, which features data-driven visuals from some of our favorite Creators around the world.

Related Topics:china Finance inflation japan US inflation united kingdom eu economy spending country uk consumer job market high interest rates

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Markets

Visualizing Global Inflation Forecasts (2024-2026)

Here are IMF forecasts for global inflation rates up to 2026, highlighting a slow descent of price pressures amid resilient global growth.

Published

2 days ago

May 3, 2024

Niccolo Conte

This line chart shows IMF projections for global inflation rates through to 2026.

Visualizing Global Inflation Forecasts (2024-2026)

Global inflation rates are gradually descending, but progress has been slow.

Today, the big question is if inflation will decline far enough to trigger easing monetary policy. So far, the Federal Reserve has held rates for nine months amid stronger than expected core inflation, which excludes volatile energy and food prices.

Yet looking further ahead, inflation forecasts from the International Monetary Fund (IMF) suggest that inflation will decline as price pressures ease, but the path of disinflation is not without its unknown risks.

This graphic shows global inflation forecasts, based on data from the April 2024 IMF World Economic Outlook.

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The IMF’s Inflation Outlook

Below, we show the IMF’s latest projections for global inflation rates through to 2026:

Year	Global Inflation Rate (%)	Advanced Economies Inflation Rate (%)	Emerging Market and Developing Economies Inflation Rate (%)
2019	3.5	1.4	5.1
2020	3.2	0.7	5.2
2021	4.7	3.1	5.9
2022	8.7	7.3	9.8
2023	6.8	4.6	8.3
2024	5.9	2.6	8.3
2025	4.5	2.0	6.2
2026	3.7	2.0	4.9

After hitting a peak of 8.7% in 2022, global inflation is projected to fall to 5.9% in 2024, reflecting promising inflation trends amid resilient global growth.

While inflation has largely declined due to falling energy and goods prices, persistently high services inflation poses challenges to mitigating price pressures. In addition, the IMF highlights the potential risk of an escalating conflict in the Middle East, which could lead to energy price shocks and higher shipping costs.

These developments could negatively affect inflation scenarios and prompt central banks to adopt tighter monetary policies. Overall, by 2026, global inflation is anticipated to decline to 3.7%—still notably above the 2% target set by several major economies.

Adding to this, we can see divergences in the path of inflation between advanced and emerging economies. While affluent nations are forecast to see inflation edge closer to the 2% target by 2026, emerging economies are projected to have inflation rates reach 4.9%—falling closer to their pre-pandemic averages.