February 8, 2022 (MLN): Consumers’ confidence in the country increased slightly by 0.7% during January 2022, indicating improving consumer sentiments, according to a survey report released by SBP.

The results of the latest Consumer Confidence Survey (CCS) showed that an improvement in Consumer Confidence Index (CCI) can be attributed to an increase in the current economic conditions index (CEC) and the expected economic conditions index (EEC) by 1.2% and 0.2% respectively.

The CCI report assesses consumers’ confidence about the economy as well as their personal financial situation. The overall CCI is calculated from survey results and evaluated within a range of 0-100, indicating an optimistic outlook when the index is above 50 while showing a pessimistic attitude towards future economic situations when it is below 50.

The index reflects the ‘current situation’ — economic changes witnessed in the last six months — as well as ‘future expectations’ that take into account changes expected in the next six months across the country.

However, consumers expect inflation to be high as their expectations related to inflation rose by 1.2% in January 2022 as compared with November 2021. On a disaggregated level, people’s expectations regarding food inflation for the next six months inched up by 1.3%, non-food non-energy (NFNE) by 0.3%, while expectations regarding energy related inflation took a dip of 0.7%.

According to the survey, consumers’ assessment of unemployment in the next six months, rose modestly by 1.4% to a reading of 71 from 70 in November 2021, indicating that consumers do not foresee the labour market gaining strength. While, the expectations index based on consumers’ outlook (next 6-months) for interest rate, surged by 3.3% to 69.8 from a reading of 67.6 in November. To note, the Monetary Policy Committee (MPC) of the central bank, recently maintained the policy rate at 9.75%.

Furthermore, consumers’ sentiments about the suitability of time to purchase durable goods over the next six months fell by 3.5% to 30 in | January 2022 compared to 31.1 in November 2021.

When asked about their future income to be increased a year later, consumers’ expectations increased by 7.3% compared to the last survey conducted in November 2021. This might be due to expectations regarding a drop in energy-related inflation that could affect people’s real income.

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