Inflation and Consumer Behavior in Pakistan – 2011 Study

“How Inflation Affects Consumption Behavior in Pakistan – 2011″

This is a not for profit public service  by Mr. Mohsin Muslim – a Sociologist, Demographer and Behavioral Scientist.

Summary Findings * Data is averaged across 9 cities of Pakistan.

1. Inflation and its Impact on Pakistanis

 

A stable inflation not only gives nurturing environment for economic growth, but also uplifts the poor and fixed income citizens who are the most vulnerable in society. Nowadays Inflation is the current issue in Pakistan. Basically it is the rise in the prices of goods and services in an economy over a period of time. When the general price level rises, each unit of the functional currency buys fewer goods and services; consequently, inflation is a decline in the real value of money — a loss of consumers’ purchasing power.

Recently the research team at IFT under the supervision of its CEO Mr. Mohsin Muslim conducted a survey on the “Affects of Inflation on Consumer’s Behavior in Pakistan” which determined that significant numbers of peoples are affected by inflation; overall 91% people are affected. The results depicts that inflation has a strong affect on behavior of consumers in Pakistan. The detail findings of the survey are shown in the graph below:

 

 

 

 

 

2. “One” out of “Four” Pakistanis is optimistic about the economic future of Country

As a response to our question “What is your opinion regarding the economic condition of the state, will it be better, remain same or become worse in the next year”, 73% of our respondents are pessimistic about future economic conditions of the state. According to them, they consider that the economic instability will rise in future rather to reduce.  People in the largest metropolis of Pakistan, particularly in Karachi 85% people are more pessimist as compare to other cities (63%). The people between the ages of 18 – 25 years, i.e. youth are more pessimistic (76%).

 

3. Concerns of Pakistanis Regarding Inflation

What are the top concerns regarding inflation is another area of survey by IFT research team.

According to the survey , significant Majority (90%) of the respondents are being affected by the amplify inflation in country and increase in prices of commodities strike them deficient. Researchers made an attempt to classify the responses w.r.t Top, Moderate and Least Concerns.

Increase in Electricity Prices, Food Prices and Unemployment are TOP concerns of Pakistanis.

The Top Most Concerns due to inflation in Pakistan are considered  as  “increase in electricity prices” which is a significant problem. Almost 85% of the sample is worried about the price slog of electricity. The second top most concern of the nation is the “increase in food prices” (84% ) followed by unemployment (80%).

Impact on economic concerns Not at all important Little bit important Very much important
Electricity price increases

2%

13%

85%

Food price increases

2%

14%

84%

Unemployment

3%

17%

80%

Increase in the prices of Gas, Gold and Oil are considered Moderate Concerns among Pakistanis.

The Moderate Concerns of people are increase in “oil prices” 78%, “gas prices” 74% and “gold prices” 71%.

Impact on economic concerns Not at all important Little bit important Very much important
Gas prices increased

4%

21%

74%

Gold price increased

9%

20%

71%

Oil price increased

5%

16%

78%

Economic depression

6%

23%

72%

Moreover the Least Concerned issues are the climatic changes 56% and natural disasters are 54%.

Impact on economic concerns Not at all important Little bit important Very much important
Climate changing

22%

22%

56%

Natural disasters

17%

28%

54%

4. How many Pakistanis are able to save Part of their Income?

In this section we discuss how many Pakistani people save part of their income, and where would they like to save their income.

Savings/Investment patterns of Pakistanis


The Inflation has significantly affected the “Savings/Investment patterns” of Pakistanis. According to our survey when we asked that “Are you able to spare part of your income for savings?” we come up with the statistics that 93% of the respondents claim that they are not left with spare money to save, while only 7% of the respondents claim to save part of their income. If we refer to the city wise findings we will figure out that among our respondents maximum savers are in Lahore, i.e. 11% of the people living in Lahore are savers compared to 89% non savers.

The graph below shows the city wise, age wise and status wise data of savers and non-savers.

 

Secondly, we asked the other question to figure out that in what manner Pakistanis would prefer to save/invest their money in order to counter Inflation.(Respondent suggestion)

Other question was “In order to cope with the inflation in the country how people would like to save their spare money?” Almost half of the respondents (50%) suggest that people have to save their spare money in Banks. Moreover, 28% suggest that people have to invest in business, 18% suggest that people have to invest their money in gold and 16% give us opinion to invest in land.

12% from the total number of respondents ask that they would not like to save their money. People living in Lahore (68%) gave opinion to save money in Banks while people living in Karachi (36%) also suggest that spare money can be saved in Banks.

 

5. Inflation & Consumption Behavior

The researcher has analyses that ” How the consumption behavior and pattern of consumers and How the consumers are been affected by inflation in the country”. We had measured this analyses according to the following factors:

  • Expenditure patterns
  • lifestyle patterns
  • Consumption behavior
  • Visiting point of Purchase

1. Expenditure patterns

In order to check the affect of the recent price hike in the country we asked the respondents that “How inflation has affected the expense on the different factors, either expense has increased, decreased or remain same.”

A significant number (80%) of survey respondents are facing expenditure increase in Education, Food and Drinks, Electricity; followed by Transportation (75%), Home Appliances (74%), Healthcare (72%) and Communication (55%).

 

 

Further, 45% percent of the respondents claim that expenditure on luxury goods has been increased due to inflation followed by expenditure increase on Beauty items (43%) and Travel (41%).

Due to price hike they have cut down expenses on the actions related to Travel (33%), Luxury Goods (31%) and Beauty (27%).

 

Total

N=Sample size

1595

All figures below in Percentage (%)

Decrease

Will remain same

Increase

Not applicable

Travel

33

16

41

9

Luxury goods

31

18

45

7

Beauty

27

26

43

4

 

2. Lifestyle patterns

The researcher tries to find out that “How Pakistanis lifestyle is being affected due to inflated prices prevailing in the country”. In order to find out that “Which of their daily activities, those respondents had cut down due to inflation?” the responses shows that almost 60% of respondents had decreased the activity of dining outside home, and 54% had decreased going out for coffee/lunch, watching films, music, plays etc. Due to Inflation Consumers had also reduced their daily activities:

N

Impact on daily activities

Decreased

Will remain same

Increased

1198

Go out for eating

60%

25%

15%

1243

Go out for Coffee/Snacks

54%

32%

14%

1055

Watching, film, music, play

54%

28%

18%

1552

Party

39%

42%

18%

3. Consumption patterns

An attempt has been made by the researcher that “Which of their (respondents) daily consumption, those they had cut down due to inflation?” the responses shows that 47% people had decreased usage of electricity and 45% people had decreased the purchase of new clothes.

 

4. Visiting point of Purchase

We ask to respondents that “How would they define their visits to the shopping places, increase, decrease or remain same over the last one year?” In answer to this question almost half (52%) of the respondents had decreased shopping at hypermarkets, 47% had decreased shopping at supermarket and 43% had decreased shopping at large grocery store.

This decrease pattern is followed in other shopping places as 35% at bakery, 34% at small grocery and 32% at Kiosik.

 

Survey Details:

Cities Name: Karachi, Lahore, Multan, Rawalpindi/Islamabad, Sukker, Peshawar, Quetta, Gujranwala, Sahiwal.

Survey Methodology:

 

The study was released and carried out by International Field & Tab (IFT), headed by Mr. Mohsin Muslim the Pakistani Representative of ESOMAR. He holds Master’s degree in Sociology and have more than 20 years experience in the field of Training, Sociology, Opinion and Marketing Research.

 

The recent survey was carried out among urban national representative sample of 1595 men and women in nine different cities of the country, during the 26th April to 4th May, 2011. The mode of survey was Face-to-Face Interviews among the people of 18 years and above.

Target: Male and Female.    Age:18 Years and above   Total Sample:1595

Survey Period: 26th April to 4th May, 2011.

*IFT-How Inflation affect on Consumption’s Behavior and Consumer’s Attitude-2011.

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