Consumer confidence drops 21.8% MoM in July: SBP

July 29, 2024 (MLN): Consumers’ confidence in the country dropped by 21.8% MoM or 8.9 points to 31.8 in July 2024, according to a survey report released by the State Bank of Pakistan (SBP).

The results of the latest Consumer Confidence Survey (CCS) showed that the Current Economic Conditions (CEC) index declined by 8.2 points to 30.8 while the Expected Economic Conditions (EEC) index declined by 9.5 points to 32.9 in July 2024 over the previous wave.

The CCI for urban households also dropped 8.4 points to 31.6, whereas for rural households, it declined by 10.5 points to 32.8 in July 2024 over the previous wave.

The CCI of fresh households recorded a decline of 8.6 points to 32.1 in July 2024. For rotating households, it decreased by 9.4 points to 31.4 in July 2024 compared with June 2024.

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.

The results show that consumers’ Inflation Expectations increased by 7.4 points to 72.5 in July 2024 as compared to the previous wave of the survey.

On a disaggregated level, people’s expectations regarding food inflation for the next six months rose by 14.8%, non-food non-energy (NFNE) by 12% and energy-related inflation by 9.5%.

According to the July survey, consumers’ assessment of unemployment in the next six months, increased by 6.5% MoM to a reading of 72.5 from 68 in June 2024, indicating that consumers foresee the labor market witnessing a downside.

While, the expectations index based on consumers’ outlook (next 6 months) for interest rate, increased by 3.5% to 68 from a reading of 65.7 in June.

Recently, the central bank’s Monetary Policy Committee (MPC) lowered its key policy rate further by 100 basis points to 19.5%, as widely expected by market analysts.

Meanwhile, consumers’ sentiments about the suitability of time to purchase durable goods over the next six months plummeted by 19.4% MoM to 29 in July 2024 compared to 36 in June 2024.

When asked about their future income a year later, consumers’ expectations worsened by 11.8% compared to the last survey conducted in June 2024.

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