Consumers turn more optimistic in Q4 — BSP survey

Published September 23, 2022, 3:26 PM

by Lee C. Chipongian

espite high inflation and a depreciated peso, Filipino consumers have a more favorable outlook for the last quarter of 2022 and in the next 12 months on expectation of additional income and improved employment condition, according to the latest Consumer Expectation Survey (CES) of the Bangko Sentral ng Pilipinas (BSP).

The quarterly survey, released together with the Business Expectations Survey on Friday, Sept. 23, indicated improved consumer confidence level because of more available jobs and their impression of good governance and effective government policies and programs by the Marcos administration for agriculture and education. There was also an impression that economic recovery from Covid-19 will be sustained and provisions for pension and financial assistance will be made available during the period.

Supermarket shoppers (Manila Bulletin article)

However, based on the CES which was conducted July 1 to 13, consumer sentiment in the third quarter was actually pessimistic compared to next quarter’s outlook.

The overall confidence index (CI) in the third quarter declined to -12.9 percent from -5.2 percent in the second quarter. This means the number of households with pessimistic views increased and continued to outnumber those with optimistic views.

“The weaker confidence among consumers was largely due to their concerns over the faster increase in the prices of goods and higher household expenses, low income, and fewer available jobs and working family members,” said the BSP.

For the fourth quarter and the next 12 months, consumer sentiments turned more optimistic with a CI of 13.4 percent from 11.2 percent previously. For the next 12 months, the CI stood at 33.4 percent from 32.4 percent.

The BSP noted that the reason for the pessimism during the months of July to September was because consumers are less confident about their family financial situation which had the lowest CI, as well as concerns about economic condition and family income.

By geographical location, the consumer confidence in both the National Capital Region (NCR) and areas outside the NCR was more pessimistic, based on the third quarter survey. About 5,546 households were surveyed, of which 2,806 or 50.6 percent were from the NCR and 2,740 or 49.4 percent were from areas outside of the NCR.

The pessimism was expressed by low, middle and high-income groups. The worry stems from continued public health risk due to the pandemic and its adverse impact on the local economy which is still recovering amid high inflation and a depreciated peso versus the US dollar.

In terms of buying intentions for big-ticket items, consumers considered the period as a cautious time to buy. The percentage of households with savings also declined in the third quarter.

Generally, BSP said consumers expect the unemployment rate may decline, interest rates may rise and the peso may depreciate in the third quarter.

“Consumers anticipated that interest rates may increase, the peso may depreciate against the US dollar, and the unemployment rate may decline in Q3 (third quarter) 2022, Q4 2022, and the next 12 months,” said the BSP.

Households also expected that rising prices of consumer goods and services will continue in the two quarters due to concerns over the following: higher household spending for food, utilities and other commodities; limited supply of goods and services; and depreciation of the peso.

However, the BSP said households think inflation will decelerate over the next 12 months as often communicated by the central bank. Factors that will make inflation ease include: effective government policies and programs; sufficient supply of goods and services; lower household spending on food; appreciation of the peso; and positive developments in the Covid-19 situation.