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SL Consumer confidence continued to decline in June

Consumer confidence, already at extremely low levels, continued to drop with the public continuing to indicate they believe conditions will worsen in coming months and years.

The Institute for Health Policy (IHP) released yesterday the June 2022 update of its Consumer Confidence Indices, which are being tried as part of its Sri Lanka Opinion Tracker Survey (SLOTS).

All IHP’s Consumer Confidence measures declined throughout the month of June, falling to their lowest values since IHP started tracking them in September 2021, and in all cases very close to their lowest possible level.

The Index of Consumer Sentiment (ICS), which is the broadest measure reflecting the public’s views on their personal economic status and the broader national economy, fell four points from six in May to two in June, close to its lowest potential level of zero.

The Index of Consumer Expectation (ICE), which captures Sri Lankans’ views about the future, also fell from four points to one in June, indicating that sentiment is being driven by increasing lack of confidence in the future.

The Index of Consumer Conditions (ICC) a broad measure of perceptions about current conditions, also fell from six to four in June.

This worsening in sentiment is despite the resignation of the Prime Minister and Cabinet in early May but coincided with growing numbers of people turning out on the street and calls for the President to resign.

The deterioration in the economic situation with continuing power cuts, lack of fuel and transports, and worsening shortages of items undoubtedly contribute. Overall, the public remained deeply pessimistic about conditions and the future during June.

he current declining trend started in mid-February with the start of power cuts and increasing impact of foreign exchange shortages, plateau from mid-March, before consumer sentiment started to decline again from early April around the time of the resignation of the Cabinet.

Consumer pessimism is now universal, across all segments. Until February 2022, consumer confidence had been higher in the youth (ages 18–29 years) than older adults, largely because the youth continued to be significantly less pessimistic about the future (tracked by the ICE which looks at future expectations), but this future optimism of the youth has now collapsed, with consumer sentiment similar across all age groups.

The public appears resigned to the likelihood that economic conditions will worsen, with all three forward looking measures (household situation in next 12 months, country situation in next 12 months and in 5 years) now below 10, and worse than the measures tracking current and recent conditions.

With the measure tracking public views of the country’s situation in five years’ time at a new low of 3, more than 95% of Sri Lankans think the country’s economy will be in worse condition five years’ time than now.

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