Consumer confidence dims in 2nd qtr

Consumer confidence dimmed considerably in the second quarter as consumer outlook on personal and overall economic prospects darkened in the wake of weakening global and domestic economy.

The latest Consumer Expectations Survey (CES) of the Bangko Sentral ng Pilipinas (BSP) revealed that consumer confidence index dipped to its lowest level since the survey was started last year.

The BSP said the decline in consumer expectations was a leading indicator that demand would be depressed in the coming months as households brace against the full impact of soaring prices and slowing economy.

“The CES is an advanced indicator of economic activity,” said Iluminada Sicat, director of the BSP’s Department of Economic Research.

Sicat said the results of the recent survey indicated there would be a slowdown in purchases and buying intentions over the next 12 months for durable goods.

According to the BSP, its survey indicates that confidence levels declined across all income levels although high-income families were less affected than lower-income groups.

Feeling the impact of surging prices of oil and food, the consumer confidence index plummeted to -43.8 percent, pulled down by the dramatic decline in economic confidence where the index took a sharp plunge to –73 percent.

Sicat said the lowest confidence index was also in the lowest income group where confidence level dropped to below -90 percent.

High income groups, on the other hand, also declined although the index remained on the positive side, indicating that among the rich, optimists outnumber pessimists.

Based on survey results, BSP said surveyed families expect their household expenditures to increase in the second quarter and the next 12 months particularly on food, electricity, fuel, education, personal care and effects.

The increase in expenditures, however, would not result from higher income therefore higher consumption but from the increase in prices which forced households to spend more for the same commodities.

Sicat said this meant future spending on consumer durables such as motor vehicles, housing and property would be lower in the second quarter up to the next 12 months.

Beyond the dimming outlook on the economy in general, Sicat said consumers were also pessimistic about their own family financial situation with the index dropping by 12.7 index points quarterly to -40.6 percent.

Sicat said only rich families saw their family incomes actually improving in the next 12 months while families in the middle and lower class foresee serious belt-tightening.

According to Sicat, the CES results showed that consumers from the capital region and areas outside the capital were uniformly pessimistic, indicating that consumers expect to be indiscriminately affected by higher prices of oil and food commodities.