Filipino consumers’ sentiment remained pessimistic in the first three months of 2023 but showed signs of improvement for the second quarter and in the next 12 months in the hope of finding permanent work amid the easing of more Covid-related restrictions. Based on the Bangko Sentral ng Pilipinas’ (BSP) first quarter Consumer Expectations Survey (CES), the overall confidence index (CI) is “less negative” at -10.4 percent as of end-March from -14.6 percent in the fourth quarter 2022.  This means that the number of households with optimistic views increased, although still lower than those with pessimistic views, said the BSP. Consumers cited cited the following for their improved sentiments: more available jobs and permanent employment; higher income from wages/salaries, remittances, and other sources; and positive developments in the Covid-19 situation such as the relaxation of vaccination, testing, and masking requirements, fewer Covid cases, and post-pandemic recovery of businesses as workers return to their offices. The CES, which was conducted between Jan. 19 to 31, showed that more Filipinos believe that the next quarter – the months of April, May and June – could have challenges. The second quarter CI remained positive but lower at 7.5 percent from 9.5 percent in end-December 2022. The lower CI was attributed to concerns about: faster increase in the prices of goods; higher household expenses; lower income; high unemployment rate; and the effectiveness of government policies and programs on targeted social support, and importation of major food items. The BSP said the consumer sentiment for the next 12 months remained optimistic as the CI marginally increased to 22.7 percent from 21.7 percent. For the next quarter and in the next 12 months, consumers expect higher interest rates to control an equally higher inflation rates. The BSP key rate is currently at 6.25 percent while inflation has slowed down to 7.6 percent in March from January’s 8.7 percent but still way above the government target of two percent to four percent. Consumers also expect “a weaker peso and lower unemployment rate” in the near term. The exchange rate is at P55 to the US dollar at the moment. “(The public) anticipate that the interest rate may increase, the peso may depreciate against the US dollar, and the unemployment rate may decline. Consumers also expect that the inflation rate may rise for the reference periods. In particular, consumers are expecting that the inflation rate may average at 6.2 percent for the next 12 months,” according to the BSP. With their market expectations, the CES said consumers are “less hesitant” about buying big-ticket items with a CI of -72.8 percent in the first quarter from -74.5 percent the fourth quarter last year. For the next 12 months, buying intentions for big-ticket items were steady at -74.9 percent from -74.7 percent. “Buying intentions across the big-ticket items were mixed: less bearish for houses and lots, more pessimistic for consumer durables, and steady for motor vehicles,” said the BSP. Generally, the spending outlook index of households on goods and services was steady at 39.2 percent for the next quarter. This means consumers who expect to spend more on basic goods and services continued to outnumber those who said otherwise, said the BSP. The CES noted a moderation in spending for food, non-alcoholic and alcoholic beverages, tobacco, clothing and footwear, water, electricity, transportation, communication, education, recreation, and culture. By contrast, spending is expected to increase at a faster rate for house rent and furnishing, gas and solid fuels, medical care, restaurants and cafés, and personal care and effects. Meanwhile, the BSP said the percentage of households with loans have decreased while those with savings have risen. About 22.8 percent of households took out loans in the last 12 months. This was lower compared to 24 percent in the last quarter of 2022. As for savings, the BSP said the percentage of households with savings went up to 32.9 percent from 30.5 percent in in the fourth quarter last year. Surveyed consumers said they saved up money for emergencies, health and medical expenses, retirement, education, and house purchase. The CES included households with a member who is an overseas Filipino worker. The survey said that of 395 OFW households, 96.2 percent use their remittances to buy food and other household needs. The rest are for medical expenses and savings. The BSP said consumer confidence across component indicators and income groups improved in the first quarter this year. “Consistent with the nationwide consumer outlook, consumer confidence was less pessimistic for Q1 2023 across all three component indicators (i.e., family financial situation, country’s economic condition, and family income), and across all income groups (i.e., low, middle, and high),” it said. The consumer sentiment across income groups was less bullish for the next quarter compared to the last quarter of 2022. For the next 12 months, the sentiment was less buoyant among the low-income group or households with a monthly family income of less than P10,000. But, it is more upbeat among the middle- and high-income groups, or households earning P10,000 and P29,999, and more than P30,000, respectively. Results of the CES provide advance indication of consumer sentiments for the current and next quarters, as well as the next 12 months, as reflected in the overall CI. The BSP said that the overall consumer outlook index is computed as the average of the three component indices, namely economic condition, family’s financial situation, and family income. The latest CES surveyed 5,467 households, of which 2,729 or 49.9 percent were from the National Capital Region (NCR) and 2,738 or 50.1 percent were from areas outside of the NCR. About 39.8 percent of CES participants were from the middle-income group while 34.5 percent were from high-income group and 25.7 percent were from the low-income group.