Consumer confidence plunges in BSP survey


Consumer confidence dived in the first quarter to its lowest level in over a year, the Bangko Sentral ng Pilipinas (BSP) reported on Monday.

While still positive, the overall confidence index (CI) of 1.7 percent — measured as the number of households that replied in the affirmative minus those that said otherwise — was markedly lower than the 9.5 percent recorded three months earlier.

(From left) Department of Economic Statistics Senior Director Rosabel Guerrero and Monetary Policy sub-sector assistant Governor Francisco Dakila Jr. speak at the briefing on consumer sentiment. PHOTO BY JOHN MICAH SEBASTIAN

It was the third consecutive quarterly drop for the indicator and the latest result was the lowest since the second quarter of 2016’s -6.4 percent – the last time the index was in negative territory.

“The lower but positive CI indicates that the number of optimists decreased but continued to outnumber the pessimists,” BSP Department of Economic Statistics Senior Director Rosabel Guerrero said in a press briefing.

The less favorable outlook was due to concerns over higher prices of goods, low incomes and higher household expenses, she explained.

Respondents also cited an increase in household debts, typhoons and other calamities, and poor harvests.

Guerrero noted that the country would continue to experience a weak La Nina until the end of this quarter based on climate advisories from the Philippine Atmospheric, Geophysical and Astronomical Services Administration.

Component indicators

Consumer confidence, which the BSP has been monitoring nationwide since the first quarter of 2007, is measured across three component indicators: the country’s economic condition, family financial situation and family income.

“For first quarter 2018, consumer confidence during the period waned across the three indicators due to the anticipated increases in prices,” Guerrero said.

The CIs for the country’s economic condition and family financial situation reverted to negative territory at -0.1 percent and -1.3 percent, respectively, from 10.9 percent and 7.3 percent previously, while that for family income dropped to 6.6 percent from 10.3 percent.

“It may be noted that the CI on the economic condition of the country registered the biggest decline among the three indicators,” the BSP said in a report.

“Consumer sentiment for the near term and the year ahead on all three indicators likewise turned less positive compared to the previous quarter’s results.

Q2, year ahead

The first quarter’s reduced optimism carried over to the overall CIs for the next three months and the year ahead with lower results of 8.8 percent (from 17.5 percent) and 24 percent (from 32 percent), respectively.

Factors behind the lower second quarter outlook were anticipation of a continued increase in prices of goods that in turn will increase household spending, Guerrero said, as well as low family earnings.

“More respondents expected that their expenditures on basic goods and services would go up for Q2 2018 compared to the previous quarter’s survey results,” the BSP said.

“Increased spending was expected on electricity, food, non-alcoholic and alcoholic beverages, fuel, water and transportation, indicating that inflationary pressures could come from these goods and services,” it added.

Savings, investment

The number of households with savings, meanwhile, rose to 36.6 percent in the first quarter from 35.6 percent three months earlier. Respondents said they were saving for emergencies, education, health and hospitalization, retirement, real estate purchases, and business capital and investments.

Almost two-thirds, or 63.6 percent, put their money in bank deposits, 44.3 percent kept their savings at home and 29.6 percent put their money in cooperatives and similar institutions.

The number of respondents who said they could afford to set aside money fell to 41.8 percent in the first quarter from 43.6 percent, the BSP said, but those who could set aside 10 percent or more of their incomes rose to 39.2 percent from 37.1 percent.

Focusing on overseas Filipino worker households, the BSP said that the number of those using remittances for savings and investments declined. The opposite occurred with regard to spending for education, medical needs, and purchases of consumer durables, houses and motor vehicles.

Peso, inflation

Survey results also showed that consumers expect inflation to increase, breaching the government’s 2.0-4.0 percent target at 4.7 percent over the next 12 months. This was higher than the 3.6 percent outlook recorded three months earlier.

Also, more respondents expect interest and unemployment rates to rise and the peso to fall further against the dollar in the year ahead.

The latest Consumer Expectations Survey was conducted from January 24 to February 3 and covered 5,569 households, 2,767 or 49.7 percent of which were from the National Capital Region (NCR) and 2,802 or 50.3 percent from areas outside the NCR.


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