Consumer Sentiment Monitor – a new study by the Department of Market and Consumption

A doctoral student from the Department of Market and Consumption at our University, Mr. Dawid Lesznik, has developed an innovative approach to constructing macroeconomic consumer sentiment indicators, referred to as the Consumer Sentiment Monitor (Polish shortcut MNK UEK [Monitor Nastrojów Konsumenckich]). These indicators are based on consumer responses to a questionnaire assessing the situation of their household, the country, the labor market, and their purchase intentions. A specialized procedure allows for calculating indexes that synthetically reflect sentiments in selected areas. Numerous studies indicate that consumer sentiment indicators exhibit predictive properties regarding changes in economic situation.

The study received funding as part of the Regional Initiative for Excellence program. In October 2024, the first wave of research was conducted on a representative sample of 1,113 Polish consumers. Based on the results, indicators were calculated and standardized on a scale from 0 to 200 points, with a neutral midpoint of 100 – separating consumer pessimism (below 100) from optimism (above 100).

The doctoral student's unique approach enables the disaggregation of consumer sentiments into matrix-like indicators – facilitating horizontal analysis (by time periods, aggregating specific areas) and vertical analysis (by areas, aggregating particular periods). Results from the first wave of research are presented in Table 1.

Key indicators of MNK include the synthetic current indicator and the synthetic expectations indicator (highlighted in Table 1), which reflect consumers' current sentiments (assessment of the present situation) and their expectations (forecasts for changes over the next 12 months), respectively. In October 2024, current sentiments were slightly negative, with a value of 96.9 points. The synthetic expectations indicator reached 101.5 points, indicating cautious consumer expectations for improvement in the general economic situation of their households and the country.

Table 1. Consumer Sentiment Monitor Indicator Values – October 2024 (N = 1,113)

Source: Author’s research.

Households' economic situations were considered relatively favorable (synthetic household situation indicator – 106.7 points), while there was pessimism regarding the country's economic situation (synthetic indicator – 92.1) and conditions for purchasing durable goods (synthetic indicator – 89.6). It is particularly noteworthy that consumer expectations for buying durable goods in the next 12 months were only 78.7 points, reflecting a cautious approach and constrained demand, potentially explained by significant spending on such goods during the SARS-CoV-2 pandemic.

The study also included indicators for expectations regarding the purchase of new vehicles ("saloon cars") and residential properties (including home construction) over the next 12 months. These indicators were excluded from the primary system due to the relatively high value and infrequency of such investments, which also explains their relatively low index values, even during favorable economic periods.

The indicator for car purchase expectations was 38.0 points.

The indicator for housing or construction expectations was 36.4 points

Respondents also assessed changes in overall retail prices over the last 12 months and provided their expectations for trends in the next 12 months. The obtained indexes, including those for gasoline prices, are presented in Table 2.

Table 2. Price Change Indexes – October 2024 (N = 1,113)

Source: Author’s research.

Polish consumers perceived a high inflation rate in the prices of goods and services over the past 12 months (lagging indicator – 156.4), while significantly lower inflationary pressure is expected in the next 12 months (expectations indicator – 108.9). These expectations are accompanied by further forecasts for rising gasoline prices (expectations indicator for gasoline – 129.9). A detailed diagnosis and forecast of price changes are presented in Table 3.

Table 3. Perceived and Expected Price Changes – October 2024

Source: Author’s research.

Given the year-on-year CPI reading of 4.9% in October 2024, as the Central Statistical Office (GUS) estimated, consumers perceived the median price change over the last 12 months to be 15.0%. At the same time, inflation for the next 12 months was generally expected to be around 7.0% (median), aligning with the trends reflected in the price change indexes presented in Table 2. Notably, one in ten consumers anticipated deflation – a price decline, which was also median-estimated at 7.0%. This could potentially stem from a misconception of equating a decrease in inflation with a decline in prices.

Finally, with an average price of unleaded gasoline PB 95 at 5.99 PLN per liter at the time of the survey, consumers in October 2024 expected this type of fuel to reach an average price of 6.54 PLN per liter (with a similar median of 6.50 PLN per liter).

The next wave of research is planned for October 2025