Higher prices pull down consumer optimism in first quarter

MANILA, Philippines — Consumer confidence in the first quarter of the year slumped mainly due to expectations of increased prices of goods, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Rosabel Guerrero, senior director of the BSP Department of Economic Statistics, said Filipino consumers turned less optimistic in Q1 2018, as reflected by the confidence index which declined to 1.7 percent from 9.5 percent in the previous quarter.

“Consumer confidence weakened, but remained positive for Q1 2018, with the overall confidence index declining to 1.7 percent from 9.5 percent for Q4 2017,” Guerrero said.

She said respondents surveyed from Jan. 24 to Feb. 3 were less upbeat brought about by their expectations of higher prices of goods, low income, and rise in household expenses.

Consumers also cited concerns on the increase in household debts, occurrence of typhoon and other calamities, and poor harvest.

Furthermore, the BSP official said the less optimistic consumer sentiment for the first quarter was carried over to the next quarter and the next 12 months, due also to anticipation of higher prices of goods, which is expected to increase household spending, and low earnings for the family.

Consumer confidence index for the next quarter decreased to 8.8 percent from 17.5 percent the previous quarter. Confidence index for the next year ahead also slipped to 24 percent from 32 percent a quarter ago.

According to the survey, consumer outlook across three component indicators – the country’s economic condition, family financial situation, and family income-all became less optimistic during the quarter.

Confidence index for the country’s economic condition and family financial situation both reverted back to negative territory, at -0.1 percent from 10.9 percent, and -1.3 percent from 7.3 percent, respectively.

The current quarter index for family income also dropped to 6.6 percent from 10.3 percent the previous quarter.

For the next quarter, respondents said they expect expenditures on basic goods and services to rise, particularly on electricity, food, non-alcoholic and alcoholic beverages, fuel, water and transportation.

“Meanwhile, the outlook on buying conditions for big-ticket items was steady, while buying intentions for big-ticket items declined,” Guerrero said.

The survey also showed consumers anticipate inflation to increase, interest rates to go up, and the peso to depreciate in the next 12 months.

In February 2018, inflation hit a three-year high of 4.5 percent It was also faster than the four percent recorded last January and the 3.3 percent posted the same month last year.

Despite this, the Monetary Board of the BSP kept rates unchanged during its last meeting, saying it expects inflation to spike this year before easing in 2019.