Philippine consumer spending recorded the sharpest deterioration among emerging Asian economies in the second quarter of 2026, as elevated inflation continued to erode households’ purchasing power despite a surge in fuel spending, according to global financial giant Visa.

In a report on Friday, July 31, Visa Business and Economic Insights principal Asia-Pacific economist Simon Baptist and Asia-Pacific economist Minakshi Barman said the Philippines’ spending momentum index (SMI) fell by 2.6 points quarter-on-quarter to 91.3 during the April-to-June period, remaining well below the 100 threshold that signals expansion.

This was despite a 27.3-point climb in fuel spending amid elevated domestic prices caused by the prolonged war in the Middle East, the report said.

The report noted that Philippine inflation remained elevated at 6.4 percent in June, while transport costs went up by a faster 12.8 percent year-on-year that month, “suggesting higher transport/fuel prices may have lifted fuel transaction values while weighing on broader purchasing power.”

The Philippines’ second-quarter performance marked a reversal from the first quarter, when spending conditions had shown tentative signs of stabilizing after March became the first month since early 2024 to post a “steady state” reading, as earlier reported by Manila Bulletin.

Visa’s latest Asia SMI heatmap showed that the Philippines remained in the “contracting” zone in the second quarter, extending its quarterly contraction streak to 10 consecutive quarters since the first quarter of 2024.

The monthly breakdown of the second quarter also showed the months of April, May, and June as all “contracting,” indicating that spending momentum remained weak throughout the quarter. Under Visa’s classifications, an SMI below 94 is considered contracting, while readings of 94 to below 97 are weakening, and those from 97 to 103 indicate a steady state.

The report likewise showed that the Philippines’ discretionary spending momentum stood at a lower 91.6 in the second quarter, while non-discretionary spending was even weaker at 90.1. Both remained below the 100 expansion threshold, indicating that spending on non-essential and essential goods as well as services continued to contract on an annual basis. During the first quarter, the Philippines’ discretionary SMI stood at 93.5, while non-discretionary SMI was at an also higher 93 compared to the second quarter.

The renewed weakness came as consumer spending momentum across emerging Asia softened only slightly. The regional SMI declined by 0.3 point to 95.1, as a seven-point increase in fuel spending was offset by declines of 0.9 point in discretionary spending and 0.8 point in non-discretionary spending. No emerging Asian market recorded an overall SMI at or above 100 during the second quarter.

Malaysia and Thailand were the region’s strongest performers, with their overall SMIs rising by 3.8 points to 97.7 and 3.1 points to 94, respectively. Meanwhile, Vietnam slipped below the expansion threshold after its SMI declined by 1.6 points to 98.5. Indonesia remained the weakest emerging Asian market at 88.6 after a 0.7-point decline, while India’s SMI fell modestly by 0.6 point to 97.6, Visa said.

Visa’s SMI measures the breadth of year-on-year changes in household spending using Visa bankcard transaction data. Readings above 100 indicate broad-based acceleration in economic momentum, while values below 100 signal contraction on an annual basis.

Discretionary spending covers categories such as travel, retail, leisure, entertainment, as well as personal and professional services, while non-discretionary spending includes healthcare, food, utilities, education, and logistics. Restaurant and fuel spending are excluded from both groupings because of their unique characteristics but are included in the overall SMI.