Hope for higher wages, more jobs temper consumer gloom in Q1

MANILA, Philippines — Filipino consumers were less gloomy in the first quarter on expectations that a sustained recovery in the jobs market and higher wages would help them weather brutally-high inflation, which nonetheless remains a major source of pessimism.

A January 19-31 survey of 5,467 families nationwide showed the overall confidence index (CI) improved to -10.4% in the first quarter, from -14.6% in the preceding three months, the Bangko Sentral ng Pilipinas reported Friday.

The less negative CI indicates that the number of households with optimistic views increased, but it was still lower than those with pessimistic views.

The respondents said their less downbeat sentiment stemmed from their hopes for “more available jobs and permanent employment”. They are also looking forward to higher income and a sustained post-pandemic recovery.

Inflation gloom

For the second quarter however, survey results showed the CI remained positive at 7.5%, albeit notably lower than the 9.5% reading a quarter ago. A positive CI means optimists outnumbered the pessimists.

The BSP said stubbornly-high consumer prices are still the top concern for respondents. Although the headline inflation rate cooled to 7.6% in March, a sustained uptrend in core inflation continues to worry experts and policymakers as this could mean a further tightening of monetary policy.

Since May last year, the BSP has hiked its policy rate by a total of 425 basis points amid a painful battle against inflation. The higher borrowing costs seek to tame inflation by tempering consumption and bringing demand in line with limited supply.

However, the rate hikes can starve the economy of much-needed juice from consumer spending, a major growth driver. A slower pace of economic activity translates to lower incomes and fewer jobs, which the respondents in the BSP survey also cited as their major concerns.

But the BSP reported that consumer sentiment in the next 12 months is more upbeat than it is now, as the CI marginally increased to 22.7%, from 21.7% previously.

The year-ahead positive outlook of consumers was supported by their expectations of more available jobs, as well as stable prices of goods and higher income, the central bank said.