February 12, 2021 (MLN): Pakistani Consumers’ perception about the current economic climate and future economic conditions of the country turned optimistic as the overall Consumer Confidence Index (CCI) increased by 8.2% and overall Inflation Expectations plunged by 0.8% in January 2021 against the previous survey conducted in November 2020.

The increase in CCI is attributable to an increase in both the Current Economic Conditions (CEC) index and the Expected Economic Conditions (EEC), as they both improved by 10.1% and 6.6% respectively.

The index ranges from 0 to 100 points, where anything less than 50 indicates that positive views are less than negative views, or in other words, pessimism, while above 50 shows an optimistic attitude towards economic conditions in the next six months.

A CCI, an economic health indicator, provides insight into the current economic and financial position of households based on their consumption and saving patterns by assessing how many durable assets possessed by them in the last six months.

Not only this, it indicates future development of households’ consumption and savings based on the expected financial position and economic conditions in the next six months; mainly focuses on unemployment and inflation which are two main challenging macroeconomic indicators for any economy to determine the output level and its growth.

The survey revealed that when it comes to personal income, consumers are generally optimistic. Particularly, the people are hoping that the next six months will improve their financial position, as the value of the future income index improved by 3% to 53.35 from 51.78 in November’20.

According to the survey, consumers’ assessment of unemployment conditions in the next six months, plunged to a reading of 63.96 from 66.11 in November, indicating that consumers foresee the labor market gaining strength. Similarly, the expectations index based on consumers’ short-term outlook (next 6-months) for interest rate, surged to 61.30 from a reading of 60.37 in November

The survey also found that the outlook of better financial conditions of the households in the next six months improved to a reading of 55.68, up from 6.22% in January.

As far as inflation indices are concerned, the survey data shows that though inflation expectations Index in January 2021 (69.48) is lower than the previous survey (70.06) largely due to lower expectations of NFNE inflation which fell by 2.39% in Jan’21 compared to the previous survey, while expectations regarding food inflation remained unchanged.

However, it is noted that consumers are expecting higher Energy inflation as the reading rose to 6893, up by 1.82% compared to the previous survey.

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