Inflation dampens consumer confidence

MANILA, Philippines — Expectations of a faster increase in prices have dampened Filipino consumers’ optimism this quarter and the next 12 months, a stark contrast to the more bullish outlook of businesses, which are looking forward to fatter sales amid the seasonal surge in demand during summer.

Results of a quarterly survey of 5,000 households nationwide showed consumers’ overall confidence index (CI) declined to 2.7 percent for the April-June period, from 5.6 percent previously, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.

That the CI stayed positive means the optimists outnumbered the pessimists, although the weaker reading indicated a less upbeat sentiment among consumers. Findings showed the pessimists mostly came from low-income households.

READ: What worries PH business, households in 2024

The weaker optimism would likely persist for much longer after the consumer CI for the next 12 months sagged to 13.4 percent, from 15 percent in the previous survey.

The BSP said households were less positive because they were anticipating faster increases in prices of goods. At the same time, families were also expecting fewer available jobs and lower incomes.

READ: March inflation higher at 3.7% but still within gov’t target range

Latest data showed inflation sizzled 3.7 percent year-on-year in March, beating the February reading of 3.4 percent.

Despite the uptick, inflation managed to stay within the 2 to 4 percent target band of the central bank for the fourth straight month, although the figure inched closer to the upper limit of the range.

Businesses more upbeat

A separate BSP poll of 1,525 companies showed the CI for businesses rose to 48.1 percent in the second quarter, from 38.2 percent previously.

The stronger optimism stemmed from expectations of higher demand, completion of projects, the seasonal surge in demand during summer, business expansions, and easing inflation.

For the next 12 months, business confidence was similarly more upbeat as the overall CI increased to 60.8 percent, from 54 percent in the previous survey round.

The firms’ more buoyant outlook was attributed primarily to their expectations of sustained strong demand; continued favorable economic conditions; lower inflation; business expansions; and lower interest rates.