High debt, high inflation crimp household spending

MANILA  -Inflation in the Philippines remains on a downward path despite upticks in August and September, and this will help rev up growth of consumer spending in the country in the coming year, according to BMI Country Risk and Industry Research.

However, the Fitch group unit also said household spending continues to be constrained by high debt levels and high interest rates.

Citing persisting economic growth as well as normalizing consumption levels, BMI penciled in a 6.3-percent growth forecast in Philippine consumer spending in 2024, which they expect to reach P12.8 trillion based on 2010 prices.

This is faster than its growth forecast of 5.5 percent to P12 trillion for 2023, which beats the prepandemic tally of P10.9 trillion in 2019.

“We hold a positive outlook for consumer spending in the Philippines over 2024, as the economic recovery feeds through to strong real consumer spending growth over the year,” the research firm said in a commentary.

“Easing inflationary pressures and healthy employment will form the base for stable consumer spending,” it added.

The Bangko Sentral ng Pilipinas (BSP) expects that the monthly readout of headline inflation may have eased again in October after rising to 5.3 percent in August and yet again to 6.1 percent in September.

The central bank is looking at the October readout to settle at 5.5 percent, or within the range of 5.1 percent to 5.9 percent. The Philippine Statistics Authority is announcing the official numbers on Tuesday, Nov. 7.

From January to September, inflation has averaged at 6.9 percent, much higher than the BSP’s target range of 2 percent to 4 percent for a full year.