Moderate pickup in consumer spending seen

MANILA, Philippines — Household consumption is likely to pick up modestly for the rest of the year if inflation continues to ease and public infrastructure spending accelerates, according to the Department of Economy, Planning and Development (DEPDev).

“You don’t expect a major reversal but gradual [recovery],” DEPDev Secretary Arsenio Balisacan told reporters when asked for an outlook on consumption growth.

He said that second quarter consumption growth was quite low.

Household spending grew by just 2.8 percent in the second quarter, slower than the 5.2 percent growth in the same quarter last year.

It was also slower than the previous quarter’s three percent growth.

“I hope that starts to climb up,” Balisacan said.

He said that inflation remains a major issue and its continued easing could support consumption.

“Hopefully, we can get the inflation to continue to decline,” he said.

Inflation eased to 6.2 percent in July from the previous month’s 6.4 percent. This brought average inflation from January to July to five percent, above the government’s two to four percent target.

Balisacan also said that accelerated public infrastructure spending, which is expected to drive private construction activity, would generate multiplier effects across the economy and help lift consumption.

From the retailers’ perspective, Philippine Amalgamated Supermarkets Association Inc. executive director Steven Cua said that supermarkets do not expect a huge increase in sales volume during the “ber” months, which come before the Christmas season.

“One myth is that ber months increase sales. They don’t. These are dry months for us,” he said.

Asked for an outlook for the Christmas season, he said that supermarkets also do not anticipate high sales volume.

“It will always be merry. But volume-wise, everyone’s looking at the first quarter next year…Even the big boys,” he said.

Consumption is the main driver of the Philippine economy.

To achieve faster and better quality growth, Balisacan said there is a need to diversify growth drivers by going beyond consumption and services.

In particular, he said the country needs to focus on attracting investment, strengthening high-value exports and revitalizing agriculture and industry.