Consumer confidence surges 14.9% MoM in May: SBP

June 10, 2024 (MLN): Consumers’ confidence in the country rose by 14.9% MoM or 4.9 points to 37.7 in May 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 improved by 4.8 points to 36.6 while the Expected Economic Conditions (EEC) index improved by 5.0 points to 38.8 in May 2024 over the previous wave.

The CCI for urban households improved by 3.9 points to 36.6, whereas for rural households, it improved by 8.2 points to 41.5 in May 2024 over the previous wave.

The CCI of fresh households recorded an improvement of 6.4 points to 38.0 in May 2024. For rotating households, it increased by 1.8 points to 37.1 in May 2024 compared with April 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 eased by 5.4 points to 69.1 in May 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 fell by 6.9%, non-food non-energy (NFNE) by 5.7% and energy-related inflation by 5.5%.

According to the May survey, consumers’ assessment of unemployment in the next six months, dropped another 3.7% MoM to a reading of 70.3 from 73.1 in April 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 down by 5.6% to 68.7 from a reading of 72.7 in April.

To note, the central bank’s Monetary Policy Committee (MPC) today lowered its key policy rate by 150 basis points to 20.5% on Monday, as widely expected by market analysts.

The reduction is the first in almost four years and comes ahead of the country’s annual budget 2024-25.

Meanwhile, consumers’ sentiments about the suitability of time to purchase durable goods over the next six months surged by 17.4% MoM to 33.2 in May 2024 compared to 28.3 in April  2024.

When asked about their future income a year later, consumers’ expectations worsened by 5.2% compared to the last survey conducted in April 2024.

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