Consumer confidence soars by 25% MoM in October: SBP

October 31, 2023 (MLN): Consumers’ confidence in the country improved by 25% MoM or 6.6 points during October 2023, indicating improving consumer sentiments, according to a survey report released by the State Bank of Pakistan (SBP).

The results of the latest Consumer Confidence Survey (CCS) showed that an improvement in the 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 20.7% and 28.9% respectively.

The CCI for urban households improved by 7.1 points to 33.5, whereas for rural households it improved by 4.6 points to 30.5 in October 2023 over the previous wave.

CCI of fresh households recorded an improvement of 8.0 points to 33.3 in October 2023. For rotating households, it improved by 3.7 points to 31.8 in October 2023 compared with September 2023

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 expect inflation to fall as their expectations of inflation declined by 6% in October 2023 compared to September 2022.

On a disaggregated level, people’s expectations regarding food inflation for the next six months also went down by 5.1%, non-food non-energy (NFNE) by 3.9% and energy-related inflation took a dip of 5%.

According to the survey, consumers’ assessment of unemployment in the next six months, fell modestly by 2.9% to a reading of 75.4 from 77.6 in September 2023, indicating that consumers foresee the labor market gaining strength.

While, the expectations index based on consumers’ outlook (next 6 months) for interest rate, dropped by 3.3% to 73.9 from a reading of 76.4 in September. To note, the central bank's Monetary Policy Committee (MPC) recently maintained the policy rate at 22%.

Furthermore, consumers’ sentiments about the suitability of time to purchase durable goods over the next six months improved by 15.6% to 28.6 in October 2023 compared to 24.7 in September 2023.

When asked about their future income a year later, consumers’ expectations decreased by 2.8% compared to the last survey conducted in September 2023.

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