Filipino consumers’ optimism in the first three months of the year did not last long as it turned lukewarm in the second quarter due to escalating prices of food and fuel, worries about job security and income prospects despite the resumption of economic activities, according to the latest central bank survey.

The Bangko Sentral ng Pilipinas’ (BSP) Consumer Expectations Survey (CES), which assesses consumer sentiment, showed that during the first quarter while still in the negative, the buying public was less pessimistic compared to the fourth quarter in 2021. The first quarter’s positive sentiment was not seen to be sustained for the months of April to June although consumers generally expect optimism for the next 12 months.

The CES confidence index (CI) for the first quarter increased to -15.1 percent from -24 percent in the previous quarter which means the number of households with optimistic views improved but still lower than those with pessimistic views, explained the BSP.

Consumers’ improved outlook during the first quarter were reflected in the performance of the country’s GDP which grew higher-than-anticipated at 8.3 percent versus 5.6 percent end-2021.

The BSP said optimistic views during the first quarter stemmed from their expectations of the following: availability of more jobs and permanent employment; additional and high income; and effective government policies and programs, such as the easing of quarantine restrictions, availability and rollout of vaccines, and provision of financial assistance.

For the second quarter, the CI was still positive but it decreased to 6.4 percent from 9.3 percent in the last quarter of 2021. The reason for the decline in consumers’ assurance level is the rising inflation, the “low to no increase in income” and the high unemployment rate.

The latest consumers’ survey was conducted March 21 to 31, when Filipinos were in the middle of a national and local campaign period, and there was a lot of economic activities and movement despite a still active but relatively contained, pandemic.

Around this time, before the May 9 elections, the BSP said consumer sentiment for the next 12 months has improved with a CI of 30.4 percent, up from 23.6 percent in the last quarter of 2021. The high CI level was due to the following: more available jobs; additional and high income; good governance; and salary increase.

Consumer spending is also more upbeat for the second quarter, based on the survey. The households' spending outlook on goods and services had a CI of 40.4 percen which was higher than 29.6 percent in the fourth quarter 2021.

As for buying sentiment, the CES indicated that consumers’ buying intentions for big-ticket items over the next 12 months “remained steady” with 5.7 percent of households considering it could be the time to purchase big-ticket items. This was a higher percentage of households compared to 5.1 percent in the previous survey.

The percentage of households with savings, meantime, rose slightly in the first quarter with 31.1 percent versus 30.2 percent in the fourth quarter 2021.

The CES include households with overseas Filipinos or Overseas Filipino Workers (OFW) as main income earners. The BSP said that the number of OFW households with savings or investments increased in the first quarter this year. About 38 percent of the 321 OFW households surveyed said they used a portion of received remittances as savings and 10 percent said it was alloted as investments.

The BSP said one in every four households that they have surveyed have borrowed money in the last 12 months. In the first three months, about 25.8 percent availed of a loan in the last 12 months, higher than the 24.2 percent recorded in the previous quarter.

“For respondents who found it difficult to apply for a loan, reasons cited include: too many or difficulty in completing requirements; income is too low to support loan application; and lack of collateral,” said the BSP.

Generally, the central bank said consumers expect unemployment to decline, interest rates to rise and the peso to depreciate in the first two quarters of 2022. They also expect the inflation rate will stay above the government’s two percent to four percent target for this year and sees an average of 5.5 percent for the next 12 months.

“The survey results showed that consumers anticipated that interest rates may increase in Q1 (first quarter) 2022, Q2 (second quarter) 2022, and the next 12 months. The peso is expected to depreciate in Q1 2022, Q2 2022, and the next 12 months. Moreover, they also anticipated that the unemployment rate may decline in Q1 2022, Q2 2022, and the next 12 months,” noted the BSP.

The BSP’s Monetary Board on May 19 raised the policy rate from two percent to 2.25 percent after 18 months of monetary policy inaction. The decision stemmed from the persistent rise in inflation which hit 4.9 percent in April, and may still rise to as much as 5.8 percent in May as per BSP’s monthly forecast range of five percent to 5.8 percent. The peso vis-à-vis the US dollar has stayed within the P52 level for some months now but still considered volatile.

The CES takes into consideration the consumers’ sentiment on the country's economic condition, their family's financial situation, and family income.

“Consumer confidence for the low- and high-income groups improved as they anticipated more harvest and additional working family members, respectively,” said the BSP. About 40.1 percent of respondents belonged to the middle-income group while 33.5 percent were considered the high-income group. Another 26.4 percent were from the low-income group.

The latest CES included 5,282 households, of which 51.5 percent or 2,720 were from the National Capital Region (NCR) and 48.5 percent or 2,562 were from areas outside of the NCR.