Inflation and Unemployment Biggest Detriments to Consumer Confidence: Survey

Dun & Bradstreet Pakistan and Gallup Pakistan have issued their report on ‘Pakistan Consumer Confidence Index (CCI)’ for Q12021.

The CCI report has been developed by assessing Consumers’ Confidence about the economy and their personal financial situation. The Index covers four key parameters, i.e., Household Financial Situation, Country’s Economic Condition, Unemployment, and Household Savings.

The Index reflects the Current Situation (economic changes felt in the last six months) and Future Expectations (changes expected for the next six months) of consumers across the country.

The CCI ranges from 0 to 200, with 100 as the neutral value. A score of less than 100 indicates pessimism. The CCI was 80.8 points in Q1 2021, compared to 90.3 points in Q4 2020, translating into a 10.5 percent q-o-q decrease.

This deterioration in sentiment is driven by restrictions imposed on business operations by the government to counter the third wave of the pandemic.

Consumers reported a greater decline in Future Expectations (down 12.0 percent) due to prevailing uncertainty, compared to the Current Situation, which also declined by 8.3 percent this quarter.

Nauman Lakhani, Country Lead of Dun & Bradstreet in Pakistan, stated, “The fifth issue of Pakistan Consumer Confidence marks the beginning of the calendar year 2021. A decline of over 10 percent quarter on quarter in the Consumer Confidence reflects increasing concerns amongst respondents. Consumers reported a greater decline in Future Expectations compared to Current Situation which demonstrates that consumers are more apprehensive about Future.”

Bilal Ijaz Gilani, Executive Director Gallup Pakistan, added, “In the first quarter of 2021, CCI shows a consumer who is both increasingly concerned about the present economic situation and also apprehensive about the future.”

Unemployment concerns have been rising to the mid-2020 level as the government imposes lockdown in major cities, curtail business hours, and shut schools in the wake of the third wave of the COVID-19 pandemic.

Inflation at a high of 7-8 percent continues to eat purchasing power of the common consumer. With the new Finance Minister, we at Gallup hope that growth-enhancing policies will be introduced to bring short-term relief to consumers.

During the current quarter, all CCI parameters witnessed an overall decline. Consumer sentiments witnessed the largest deterioration in regards to the Economic Condition of the Country, which declined by 16.0 percent on account of the resumption of smart lockdown.

During Q1 2021, Household Financial Situation was the only CCI parameter that managed to stay above 100 points despite decreasing for the first time since Q1 2020.

Furthermore, Unemployment continues to drag consumers’ enthusiasm and remained the most pessimistic parameter. The Unemployment Situation deteriorated by 15.7 percent q-o-q. More than half (53 percent) of respondents believe that Unemployment will increase in the next six months compared to 42 percent in Q4 2020 and 39 percent in Q3 2020.

During Q1 2021, 92 percent of consumers believed that daily essentials have continued to become expensive/very expensive in the last 6 months as compared to 93 percent in Q4 2020.

Source: Pro Pakistani