April 6, 2020 (MLN): The overall Consumer Confidence Index rose by 8.5% and overall Inflation Expectations plunged by 13.7% in March 2020 against the previous survey conducted in January 2020.
An index of consumer confidence gathered by SBP and IBA increased by 3.44 points to 44.03 in March 2020 when compared with the previous reading of 40.59 of January 2020.
The results of the latest Consumer Confidence Survey (CCS) conducted during 1-6th January, showed improved consumers’ sentiments as an increase in CCI is mainly attributed to a significant increase in the current economic conditions index (CEC) by 11.3% while the expected economic conditions index (EEC )improved by 6.3% from its value in the previous survey.
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 unemployment and inflation which are two main challenging macroeconomic indicators for any economy to determine the output level and its growth.
It is pertinent to mention that overall CCI is the average index of CEC and EEC indices which ranges from 0 to 100. Above 50 shows a boost in consumers’ confidence towards future development while below 50 indicates a pessimistic attitude towards the future economic situations. The higher the index value they tend to save less and are more prone to spend money on major purchases in the next six months.
As far as inflation indices are concerned, the survey data showed that people expect inflation to rise modestly in the next six months, especially in energy inflation, however, this rise is significantly lower across all measures compared to the previous wave in January 2020.
According to the data gathered by Mettis Global, the trend since 2012 shows that the overall CCI surged by 14.14 points to 44.03 i.e. higher by 50.32% where EEC contributed more in the CCI as it increased by 59% whereas CEC by 40.44% restricting the increasing CCI. Since then the highest CCI reading has been 55.97 points, recorded in September 2018.
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