MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) announced that consumer confidence improved for the 2nd quarter of 2018, based on the results of its Q2 2018 Consumer Expectations Survey (CES).
The results of the survey, released on Friday, June 8, showed that the overall confidence index (CI) was at 3.8% for the 2nd quarter of 2018, from 1.7% for the 1st quarter.
This improvement followed 3 straight quarters of decline.
“The higher Cl indicates that the optimists increased and continued to outnumber the pessimists,” said the BSP.
These 3 indicators were used to measure consumer outlook:
- the country’s economic condition
- family financial situation
- family income
“For Q2 2018, the improved consumer sentiment on the country’s economic condition and family financial situation outweighed the less favorable outlook on family income,” the BSP said.
“Notably, the CIs for the country’s economic condition and family financial situation reverted to positive territory [at 5.7% from -0.1%, and 0.2% from -1.3%, respectively]… while family income edged lower from a quarter ago [at 5.5% from 6.6%].”
The Philippines’ gross domestic product (GDP) grew by 6.8% in the 1st quarter of 2018. It was the 10th straight quarter that the economy grew by 6.5% or better.
Optimistic, but higher prices seen
The central bank said respondents’ optimism was due to their expectations of:
- improvement in peace and order
- additional income
- availability of more jobs
- effective government policies
- increase in family savings
In terms of income groups, “the low-income group remained pessimistic due to the expected higher prices of goods and low income, but the number that said so declined relative to the previous quarter survey results.”
The middle-income and high-income groups were more optimistic, expecting peace and order to improve, and salaries to increase. (READ: FACT CHECK: NEDA didn’t say family of 5 can live decently on P10,000 a month)
Consumers, however, still think inflation will rise further, interest rates will go up, and the Philippine peso will weaken even more in the next 12 months.
The Q2 2018 CES showed that consumers expect inflation to reach 4.2% in 2018, beyond the government’s 2% to 4% target range for the year.
Inflation in May had risen to 4.6%, another new 5-year high, driven by seafood, fuel and lubricants, and bread and cereals. (READ: Diokno on high fuel prices: ‘We should be less of a crybaby’)
Last May 10, the BSP had raised the benchmark interest rate by 25 basis points to 3.25% in a bid to help the economy withstand rising inflation and the weakening peso. It was the first time since September 2014 that the central bank had hiked interest rates.
Outlook for near future
For the 3rd quarter of 2018 and the year ahead, the BSP said consumers’ optimism was generally steady, with CIs at 8.7% from 8.8%, and at 23.1% from 24%, respectively.
The central bank said this “stemmed from the counterbalancing of the number of respondents that reported more positive views on the economy, in anticipation of more jobs and additional income, versus those with negative views due to expectations of higher prices of goods.” (READ: [OPINION] The real score about NEDA’s P10,000 budget ‘challenge’)
The spending outlook index of households on basic goods and services was also steady at 36.3%, from 37.1% in the previous survey.
Consumers expected higher spending on house rent and furnishings, communication, education, recreation and culture, and restaurants and cafes. But fewer respondents indicated increased expenses on food, beverages, water, electricity, fuel, and transportation. (READ: How much does a family in the PH need to live decently?)
The Q2 2018 CES was conducted from April 2 to 14. A total of 5,339 households had been polled, 2,609 of which were from Metro Manila and 2,730 from areas outside the capital region. Majority of the respondents were middle-income (43%) and low-income (42.5%), with high-income respondents (14.5%) the smallest group.
The Philippines’ business sector earlier indicated slightly weaker confidence in the economy. – Rappler.com
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