Consumer Confidence Index sees a 5.07% increase

SBP-IBA survey also says respondents expect overall price levels to rise

KARACHI: After declining for two consecutive terms, the overall Consumer Confidence Index (CCI) increased by 5.07% compared with the previous survey held in July 2017.

The results are part of the September edition of the SBP-IBA Consumer Confidence Survey, which also reveal that respondents expect an increase in the overall price level compared to the last survey.

The central bank gives importance to this consumer survey in determining the benchmark interest rate for every two months.

This is why the Monetary Policy Committee of the SBP, while mentioning the SBP-IBA survey results on Friday, commented that though consumers expect an increase in inflation rate in the coming six months, it will remain below the target of 6%.

The Consumer Price Index (CPI) eased to 3.2% in the first two months (July to August) of fiscal year 2017-18 compared with 3.8% during the same period last year.

Expectations about inflation actually have a significant role in determining the overall price level in an economy. Economists believe prices go up - or remain stable - partly because people expect them to.

The CCI index has jumped to 173.81 points compared with 165.43 points in the last survey conducted in July 2017.

CCI is made up of expected economic conditions (EEC) index - which measures households’ expectations of economic conditions in the next six months - and the current economic conditions (CEC) index that captures households’ current economic conditions relative to the last six months.

EEC and CEC both showed an increase in September 2017. EEC increased to 157.82 points in September 2017 from 151.89 points in July 2017. CEC also jumped to 192.13 points from 180.94 points in the period under review.

This was the third consecutive year when CCI index showed a significant growth in the month of September compared to July. The index dropped significantly last time in September 2014 when Pakistan Tehreek-e-Insaf (PTI) was staging a massive sit-in in Islamabad against the government on alleged rigging in general elections of 2013.

The survey provide information on “what people are thinking” about current and future economic conditions, future trends in inflation, interest rates, unemployment, and their household income.

Consumer Confidence Survey (CCS) is a stratified random telephone survey of households across Pakistan. Launched in January 2012 and having a two-monthly frequency, the survey is conducted by the Institute of Business Administration (IBA), Karachi and the State Bank of Pakistan (SBP).

This report summarizes the views of 1773 surveyed households. Of these, about 33 percent households were interviewed back in March 2017 while the remaining are fresh interviewees. This exercise was conducted during the afternoon hours of September 5th-9th, 2017.

Published in The Express Tribune, September 30^th, 2017.

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