CONSUMER outlook for the fourth quarter of the year has weakened to -22.5 percent on the back of a confluence of factors starting with the high prices of commodities, the Bangko Sentral ng Pilipinas (BSP) has reported.
Based on the BSP’s latest Consumer Expectations Survey, consumer outlook for the fourth quarter has declined further to -22.5 percent compared to the third-quarter level of -7.1 percent.
“The fourth quarter 2018 outlook of businesses and consumers both weakened as firms and households became more conscious due to relatively high commodity prices,” said BSP Department of Economic Statistics Director Redentor Paolo Alegre Jr.
Respondents attributed the weaker sentiment to: higher prices of commodities; low income; an increase in household expenses; and an upsurge in the number of unemployed persons.
“Respondents also noted the occurrence of typhoon and other calamities in third quarter 2018 as reasons behind their weaker sentiment for the current quarter,” according to the BSP.
The BSP explained that the negative index indicates that the pessimists outnumbered optimists during the fourth quarter 2018. The overall consumer Cl measures the average direction of change in three indicators—overall condition of the economy, household finances and household income.
Similar to the weak outlook for the fourth quarter, the consumer outlook is also less buoyant for the first quarter of 2019 and the year ahead due to expectations of: higher prices of goods; low salary; a rise in expenditures; and a high unemployment rate.
The quarter-on-quarter decline in confidence for the fourth quarter was observed across the three component indicators of consumer confidence with the lowest consumer index on the economic condition of the country, followed by family financial situation and family income.
For the first quarter of 2019 and the year ahead, consumer confidence on the three component indicators weakened, except on family income, which remained steady.
The spending outlook index of households on basic goods and services declined to 42.3 percent for the first quarter of 2019, from 45.7 percent in the fourth quarter survey results.
“This suggests that, while more respondents continue to expect higher spending on basic goods and services, the number that said so decreased compared to a quarter ago, indicating that growth in consumer spending could slow down in the near term.”
In line with savings in the fourth quarter, it reported an increase to 32.8 percent, from the 32.5 percent recorded in the third quarter of 2018, with respondents making savings for: emergencies; health and hospitalization; education; retirement; purchase of real estate; and business capital and investment.
In terms of inflation, consumers who expected inflation to go up continued to outnumber those who held the opposite view for the next 12 months, but the number that said so declined from that of a quarter ago.
Respondents also expect the rate of increase in commodity prices to breach the upper end of the government’s 2-4 percent inflation target range for 2018, at 5.1 percent, over the course of the next 12 months. This is higher than the third-quarter survey result of 5 percent.