Sticky inflation a bane to recovering consumer confidence
MANILA -The growth in spending among Filipino households is expected to slow to 5.5 percent in 2023 as higher cost of living can still stymie consumer confidence, according to Fitch Solutions subsidiary BMI.
It said in a report that consumer confidence has already increased since its all-time low in the second quarter of 2020 or during the onset of the COVID-19 pandemic.
“We predict inflation to remain elevated over 2023 and should inflation remain sticky (and) this would quickly sap disposable income and thus discretionary spending,” BMI said, however.
The Fitch Group unit said that while its forecast growth for consumer spending in the Philippines this year was slower than the estimated 8.7-percent growth last year, it has penciled in an average spending growth rate of 5.9 percent for the years 2023 to 2027.
Slower GDP
“Inflationary forces will remain elevated across 2023, but nominal income growth is still forecast to outpace inflation, which ensures real income growth for consumers, giving greater propensity for spending,” BMI said.
The company’s outlook on household spending is in line with its forecast of a slower expansion of Philippine gross domestic product (GDP), predicted at 5.9 percent this year from the 7.6 percent recorded last year.
“The slowdown in growth is in line with expectations, but the pace of deceleration was more modest than predicted,” BMI said.
It said to expect a further slowdown in consumer spending through the forecast period or until 2027 amid high prices of energy and rising interest rates. INQ
