Consumer Confidence Index [CCI]

By : Neha Dhyani

Updated : Jun 2, 2022, 11:56

In simple words, Consumer Confidence Index [CCI] is an economic survey that several countries get published via different organizations. Consumer Confidence Index [CCI] is an important component of the Consumer Confidence Survey that measures the consumers' reactions to their expected financial condition. It is a survey that tries to analyze how optimistic or pessimistic are consumers regarding their future financial opportunities. The survey was conducted by the Conference Board, which created the Consumer Confidence Index [CCI] in 1967.

The index is based on the concept that optimistic consumers will spend more, further stimulating the economy. On the other hand, if consumers are pessimistic, their spending behaviour can cause an economic slowdown or even a recession. The consumption pattern of consumers reflects their attitude towards their financial situation. In India, CCI plays a crucial role as consumption affects 60-70% of GDP.

Usage of Consumer Confidence Survey

  1. Retailers, manufacturers and banks monitor changes in CCI, and even the government to aid in their decision-making process.
  2. If the index change is less than 5%, it is considered inconsequential, but if the change is more than 5%, it is taken to indicate a change in the economy.
  3. A decreasing trend suggests that consumers are insecure about retaining and securing a good job, affecting their spending pattern. A downwards trend will affect the manufacturing sectors, which will likely pare down inventories, which will also affect lending activities on the part of banks. Thus, the whole process is related, and the index can bring a sudden change in the economy.
  4. Likewise, an increasing trend will mean an optimistic consumer attitude, leading manufacturers to increase production and hiring, resulting in the rise in demand for bank credits.

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Consumer Confidence Survey - Indian Economy

In India, ZyFin Consumer Outlook Index provides useful insights to judge the direction of the country's national and regional economies. It is the first and the only index for measuring consumer sentiments in the country. The index report is published once every month and is based on results drawn from a monthly survey of responses from 3000 consumers across 11 cities in India. The consumer confidence in India stood at 62.3 in November 2021, showing an improvement in the index compared to 57.7 in September.

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Consumer Confidence Index [CCI] - The US Scenario

CCI is considered the most reliable index for understanding and reading US consumer confidence. It is the barometer of the US economy's health. It is derived from the consumers' current perceptions about business and employment opportunities, their related expectations, and income in the coming six months. The Conference Board issues monthly consumer confidence results based on a survey conducted on 5000 households.

The Federal Reserve oversees Consumer Confidence Index [CCI] when interest rate changes are determined. In addition to the Conference Board's CCI, other survey-based indexes in the United States also attempt to track consumer confidence. They are the University of Michigan Consumer Sentiment Index, Washington Post-ABC News Consumer comfort Index, and Institute of Business Cycle Analysis.

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FAQs on Consumer Confidence Index [CCI]

Q.1. In India, the Consumer Confidence Index [CCI] is published by whom?

Ans. The Reserve Bank of India publishes the Consumer Confidence Index [CCI] in India.

Q.2. What is meant by a good Consumer Perception Index Score?

Ans. If the indicator is above 100, it signals optimistic consumer confidence, which is a good indicator, while if it is below 100, the consumer attitude is considered pessimistic.

Q.3. What is the role of the Conference Board in the context of the Consumer Confidence Index [CCI]?

Ans. In the Context of the Consumer Confidence Index [CCI], The Conference Board is an independent, global business membership and research organization that offers practical knowledge to leading global organizations on how they can improve their performance for a better served economic society.

Q.4 What is the Consumer Perception Index of the United States as per the latest report of the Conference Board?

Ans. As per the latest CCI report published on 22nd February 2022 by the Conference Board, the Consumer Confidence Index [CCI] stands at 110.5 (1985=100).