Confidence among Filipino consumers—traditionally some of the most profligate in Asia—nearly evaporated in the first quarter of the year, with most citing rising prices of goods and services as the main reason for the decline in their optimism.
In a briefing on Monday, the Bangko Sentral ng Pilipinas said the overall confidence index for the first three months of 2018 dropped sharply to 1.7 percent from 9.5 percent in the fourth quarter of 2017.
More importantly, central bank officials noted that the weak consumer confidence may extend for the rest of the year, coinciding with a period of high inflation that was earlier predicted by economists as the impact of the Duterte administration’s tax hikes is absorbed into the economy.
“The less optimistic consumer sentiment in the first quarter of 2018 [will likely be] carried to the near term and the next 12 months due to anticipation of continued increase in prices of goods,” BSP said in a statement.
The confidence index is computed as a percentage of households that answered in the affirmative less the percentage of households that answered in the negative with respect to a given indicator.
The lower but positive confidence index in the central bank’s latest survey indicates that the number of optimistic consumers decreased, but still slightly outnumbered the pessimists.
Consumer outlook is measured across three component indicators, namely, the country’s economic condition, the family’s financial situation and family income.
“For the first quarter of the year, consumer confidence waned across the three indicators due to the anticipated increase in prices,” BSP said. “Notably, the confidence index for the country’s economic condition and family financial situation reverted to negative territory for the current quarter.”
Meanwhile, the current quarter’s confidence index for family income dropped to 6.6 percent from 10.3 percent.
“It may be noted that the confidence index on the economic condition of the country registered the biggest decline among the three indicators,” the central bank added. “Consumer sentiment for the near term and the year ahead on all three indicators likewise turned less positive compared to the previous quarter’s survey results.”
The BSP’s survey was conducted from Jan. 24 to Feb. 3. The samples were drawn from a master sample list of households of the Philippine Statistics Authority. A total of 5,569 households were surveyed across the country, with a response rate of 97 percent.