Consumer confidence drops by 4.1% MoM in February: SBP

March 21, 2024 (MLN): Consumers’ confidence in the country declined by 4.1% MoM or 1.4 points during February 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 this drop in the Consumer Confidence Index (CCI) can be attributed to a decrease in the current Economic Conditions Index (CEC) and the expected Economic Conditions Index (EEC) by 7.9% and 0.9% respectively.

The CCI for urban households declined by 2.3 points to 32.8, whereas for rural households, it improved by 1.9 points to 27.9 in February 2024 over the previous wave.

CCI of fresh households recorded a decrease of 0.6 points to 31.9 in February 2024. For rotating households, it declined by 2.8 points to 31.3 in February 2024 compared with January 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 decreased by 1.1 points to 72.3 in February 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 inched up by 0.2%, non-food non-energy (NFNE) by 1.5% and energy-related inflation went up by 1.6%.

According to the survey, consumers’ assessment of unemployment in the next six months, dropped modestly by 1.7% MoM to a reading of 72.8 from 74 in January 2024, indicating that consumers foresee the labor market witnessing an upside.

While, the expectations index based on consumers’ outlook (next 6 months) for interest rate, went up by 0.4% to 69.6 from a reading of 69.3 in January.

To note, the central bank's Monetary Policy Committee (MPC) recently maintained the policy rate at 22% for the sixth consecutive meeting.

Conversely, consumers’ sentiments about the suitability of time to purchase durable goods over the next six months worsened by 7.1% to 24 in February 2024 compared to 25.8 in January 2024.

When asked about their future income a year later, consumers’ expectations improved by 1.8% compared to the last survey conducted in January 2024.

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