Filipino consumers turned pessimistic in the third quarter as businesses were less upbeat, according to a report from the Bangko Sentral ng Pilipinas (BSP) released on Friday.
The BSP survey of 5,475 households showed that the overall confidence index (CI) of Filipino consumers for the next quarter had turned negative at -0.4 percent, down from 2.7 percent in the previous round of the poll.
This negative CI indicates that pessimists outnumbered optimists. The last time consumer confidence for the upcoming quarter turned negative was in the first quarter of 2021 during pandemic-induced lockdowns.
Respondents’ expectations of a quicker increase in prices of goods fueled this pessimism, with concerns also revolving around the possibility of lower income due to fewer available jobs in the next three months.
As a result, the survey indicated that there may be a “moderation” in consumer spending in the next three months, with the percentage of households with savings decreasing to 31.4 percent in the second quarter from 33.5 percent in the first quarter.
Despite this, the CI for households in the next 12 months remained positive at 13.5 percent. However, this was slightly lower than the previous poll, suggesting that consumers were less optimistic about the future.
Economist Makoto Tsuchiya from Oxford Economics noted that while inflation is expected to ease in the coming months, a recovery in consumer spending might take some time.
The BSP also reported that inflation in June may have ranged from 3.4 to 4.2 percent, with the possibility of breaching the central bank’s target range of 2 to 4 percent due to price increases in agricultural commodities and currency depreciation.
Additionally, a separate survey of 1,526 companies showed a decline in the CI for businesses for the next quarter, pointing to expectations of lower demand, elevated commodity prices, and slower economic growth. This could result in slower hiring activity in the third quarter and less optimistic sentiments in the next 12 months for businesses.
