Philippines consumer outlook turns pessimistic in fourth quarter

CEBU, Philippines — Consumer outlook in the Philippines experienced a downturn in the fourth quarter of 2023, as sentiments were dampened by mounting concerns surrounding inflation, rising unemployment rates, and lingering uncertainties in the economic landscape.

According to a survey conducted by Bangko Sentral Ng Pilipinas (BSP), the consumer outlook in the Philippines was more pessimistic for the fourth of 2023 as the overall confidence index (CI) became more negative at -19 percent from -9.6 percent in the third quarter of 2023.

This is reflective of the combined decrease in the percentage of optimists and the increase in the percentage of pessimists.

The survey indicated that the weaker confidence among consumers stemmed from their concerns about the: (a) faster increase in the prices of goods, (b) lower income, (c) fewer available jobs, and (d) the effectiveness of government policies and programs on inflation management, public transportation, and financial assistance to low-income households.

For the first quarter of 2024 and the next 12 months, consumer optimism further weakened as the CIs declined to 5.6 percent and 15 percent (from 7.8 percent and 18.9 percent in the Q3 2023 survey results), respectively.

Across the three component indicators (i.e., country’s economic condition, family’s financial situation, and family income), consumers were more pessimistic for the fourth quarter 2023 as the respective indices of the component indicators became more negative.  Similarly, consumer confidence for the current quarter deteriorated across the income groups, i.e., pessimism increased in the low- and middle-income groups, and optimism turned into pessimism in the high-income group.

The consumer sentiment on buying big-ticket items for the last quarter of 2023 was more pessimistic as the CI became more negative at -71.3 percent from -62.7 percent in the third quarter of 2023.

During the same period, 22.9 percent availed of a loan in the last 12 months, lower than the 26.6 percent recorded in the third quarter of 2023. Further, the percentage of households with savings declined to 29.1 percent in the fourth quarter of 2023 from 32.8 percent in the same period last year.

Based on the survey result, consumers anticipate that the interest and unemployment rates may increase and the peso may depreciate against the U.S. dollar for the current quarter, next quarter, and the next 12 months.

Meanwhile, households also expect that the inflation may increase at a faster rate for all reference periods as the number of respondents who expect higher inflation for said periods increased compared with the third 2023 survey results.

In particular, consumers expect that the inflation rate could hover around 6.9 percent for the next 12 months, surpassing the upper limit of the National Government’s inflation target range of two to four percent for the 2023-2024 period.

This heightened inflation projection reflects growing apprehensions among consumers about the economic challenges and potential repercussions on their purchasing power in the coming year.