BSP: Consumer confidence still positive but further declines recorded in Q4 due to higher prices, peace and order concerns

Consumer confidence remained positive in the fourth quarter but fell for the second straight quarter due to rising prices of basic goods as well as peace and order concerns, the Bangko Sentral ng Pilipinas reported Friday.

The BSP’s consumer expectations survey (CES) for the fourth quarter showed that the overall confidence index (CI) declined to 9.5 percent for the October to December period from 10.2 percent in the third quarter and the record-high 13.1 percent in the second quarter.

The still positive CI nonetheless meant that optimistic consumers outnumbered pessimists.

The fourth-quarter CI was the third highest reading since the CES was first conducted in 2007.

Each of the first six quarters of the Duterte administration posted a positive CI, while the other CIs prior to the third quarter of 2016 were all negative, BSP data showed.

Rosabel B. Guerrero, director at the BSP’s department of economics statistics, told reporters in a media conference that the sustained positive sentiment among consumers was attributed by survey respondents to “additional family income and higher salary, and availability of more jobs leading to an increase in the number of employed family members.”

“However, their slightly less favorable outlook, which counterbalanced their positive views, was due to concerns on higher prices of goods and household expenditures; peace and order problems, particularly extrajudicial killings, drug issues and crisis in Marawi, occurrence of calamities such as typhoon; and poor health and high medical expenses,” Guerrero said.

The BSP conducted the fourth-quarter CES on October 2-14, when the war in Marawi City between government forces and ISIS supporters was ongoing.

It was also in October when inflation or the rate of increase in prices of basic goods peaked to a three-year high of 3.5 percent.

BSP Deputy Governor Diwa C. Guinigundo said the increase in prices in the fourth quarter was a result of the Christmas holiday season, during which there is strong consumer demand.

Higher consumer prices and the Marawi crisis were also the main reasons cited by respondents for their tempered optimism in the third quarter.

In the fourth quarter of last year, some consumers said they were worried about the rising number of alleged extrajudicial killings.

Unlike this quarter, the anti-drug campaign was cited as a reason that boosted consumer confidence during the fourth quarter of 2017.

For the first quarter of 2018, the CI slightly went down to 17.5 percent from 17.8 percent in the previous quarter’s survey, Guerrero said.

For the entire 2018, consumer outlook was also “less upbeat,” Guerrero said, as the CI declined to 32 percent from a quarter ago’s 33.7 percent.