Despite a marginal improvement in confidence, Filipino consumers expect higher inflation and job losses in the last two quarters of the year and the next 12 months, according to the Bangko Sentral ng Pilipinas (BSP).
Based on the results of the BSP’s Consumer Expectations Survey (CES), consumer sentiment for the third quarter of 2023 improved marginally as the overall confidence index (CI) turned slightly less negative at 9.6 percent from 10.5 percent in the second quarter of 2023.
However, consumers expect inflation to average 6.6 percent in the next 12 months. This is significantly higher than the 2 to 4 percent inflation target of the central bank.
Households also expect that the inflation may increase at a faster pace for all reference periods as the number of respondents who expect higher inflation for said periods increased compared with the Q2 2023 survey results.
“Furthermore, they anticipate that the unemployment rate may rise for the current quarter, remain steady for the next quarter, and decline for the next 12 months,” BSP said.
The central bank also said consumers expected higher interest rates and a weaker peso in the third and fourth quarters of 2023 as well as in the next 12 months.
Meanwhile, BSP data showed that the percentage of households with loans and savings increased in the third quarter of 2023.
The data showed 26.6 percent of consumers availed of a loan in the last 12 months. This is higher than the 24.8 percent recorded in the second quarter of 2023.
BSP also said the percentage of households with savings rose to 32.8 percent from 30.2 percent in the second quarter of 2023.
“Consumers are less hesitant about buying big-ticket items in the third quarter of 2023. The consumer sentiment on buying big-ticket items for the third quarter of 2023 was less pessimistic as the CI turned less negative at 62.7 percent from 67.7 percent in the second quarter of 2023,” BSP said.
The central bank said the improvement in consumer confidence reflected the decrease in the percentage of pessimists, which outweighed the decrease in the percentage of optimists.
Consumers attributed their less pessimistic sentiment for the third quarter of 2023 to more available jobs and permanent employment; higher income from wages/salaries, remittances, and other sources; and additional working family members.
For the fourth quarter of 2023, the consumer sentiment improved as the CI increased to 7.8 percent from 4.6 percent a quarter ago.
However, the consumer sentiment for the next 12 months was less optimistic as the CI declined to 18.9 percent from 20.5 percent in the second quarter of 2023.
In the third quarter of 2023, consumer outlook is mixed across the three component indicators and across income groups. The sentiment in the third quarter of 2023 is mixed across the three component indicators of consumer confidence.
The BSP said consumers were less pessimistic for the country’s economic condition and more pessimistic for the family’s financial situation.
The data also showed that consumer’s confidence was steady for family income; and across income groups, i.e., less pessimistic among the low-income group, more pessimistic among the middle-income group, and less optimistic among the high-income group.
Image credits: Nonie Reyes