In Q3, higher prices slash consumers’ savings

Higher household expenses, mainly due to rising prices of basic goods, led to a cut in savings among mostly middle-income consumers in the third quarter.

According to the latest Consumer Expectations Survey (CES) conducted by the Bangko Sentral ng Pilipinas (BSP), the number of households with outstanding savings during the July to September period dropped to 26.9 percent from 30.3 percent in the second quarter.

The third quarter survey results reflected bearish consumer sentiment on the back of rising prices of basic commodities as well as political uncertainty, bringing the overall confidence index (CI) to -26.3 percent—the lowest in almost four years.

The middle class bore more of the brunt of higher commodity prices, slashing their savings greater than low- and high-income groups, the CES showed.

A lower 34.3 percent of middle-income households managed to save in the third quarter, down from 41.5 percent the previous quarter. The percentage of middle class consumers who got to set aside money during the July to September period was also the lowest in a year.

Despite a decrease in savings, the number of respondents who still deemed they could manage to save some money remained steady at 34.9 percent in the third quarter from 35.7 percent in the second quarter.

Also, the percentage of consumers who said they could set aside at least a tenth of their monthly gross family income was stable at 35.6 percent during the July to September period, compared with 36.3 percent in April to June.

The top reasons why Filipinos save money are the following: For emergencies, retirement, health and hospitalization, education, and business capital and investment, the latest survey results showed.

During the third quarter, two-thirds of Filipino households reported to have bank deposit accounts. A tenth of the survey respondents said they put their money in cooperatives, “paluwagan,” and other loan/credit associations, while 23.3 percent kept their savings at home, the BSP said.

The quarterly survey is conducted by the central bank among respondents nationwide. The results help guide BSP’s policymakers in determining the whether monetary policy should be tightened (which results in higher interest rates) or loosened (which results in lower rates).

More recently, the central bank has been struggling to contain rising inflation which, it said, is being caused by supply bottlenecks, especially for basic commodities.