SBP-IBA survey: Perceptions about economic conditions have improved

CCI reveals households expect inflationary pressure to ease.

KARACHI: Consumers’ perceptions about current and expected economic conditions in Pakistan have improved ‘significantly’ over the last two months, according to findings of the recently released Consumer Confidence Index (CCI).

Jointly conducted by the State Bank of Pakistan (SBP) and Institute of Business Administration (IBA) every two months, the consumer confidence survey revealed CCI improved to 143.9 points in May from 141.8 points in March.

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.



The importance of the SBP-IBA survey can be gauged from the fact that the central bank based its decision to keep the key interest rate in the economy flat in the last monetary policy announcement partially on the findings of the survey’s March edition.

Both sub-indices of CCI registered ‘considerable gains’ in May, with the EEC improving the most after declining in the July 2013 edition.

Importantly, the survey revealed that relative to the preceding edition, households are expecting inflationary pressures to ease in general. For example, the percentage of households expecting an overall rise in prices over the next six months in May stood at 44.2% as opposed to 49.4% in March.

Speaking to The Express Tribune, Global Securities Research Analyst Umair Naseer said an increased number of people expect inflation to remain comparatively low going forward because the average consumer price index reading in the second half of 2013-14 is going to be notably lower than that recorded in the first half.

Inflation in the first half of 2013-14 remained 8.9%. It was during the first half that the central bank tightened its monetary policy stance from being ‘accommodative’ in order to contain inflation to the single digit. The key interest rate was increased by a cumulative 100 basis points in two stages of 50 basis points each during the first half of 2013-14.

Naseer says his brokerage house expects inflation to remain about 8% in the current calendar year.

The survey also revealed that 22.9% of the 1,732 surveyed households were ‘positive’ about their ‘income a year later’ as opposed to 19.5% back in January. The response of 7.4% households was positive when asked about buying durable items in the next six months compared to 6.3% in January.

Similarly, the percentage of households expressing interest in buying a car or a house in the next six months has also increased notably in May over January.

About 15.3% households surveyed reported ‘better financial conditions in the next six months’ in May as opposed to 13.7% in January, reflecting the overall improvement in the respondents’ expectation of financial wellbeing in the near future.

Published in The Express Tribune, June 7^th, 2014.

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