AFTER eight quarters of positive consumer reading, the overall confidence index (CI) reverted to negative territory at -7.1 percent in the third quarter, from 3.8 percent previously, results of the Consumer Expectations Survey conducted by the Bangko Sentral ng Pilipinas showed.
The increase in commodity prices, low income, higher household expenses and high unemployment rate were cited as reasons for the negative outlook of the survey’s respondents.
“There were also concerns about higher educational expenses and higher transportation expenses as reasons behind their gloomy prospects,” the report read.
Consumers were also pessimistic about their prospects for the next quarter and the year ahead with CIs declining by half from the previous quarter’s survey at 3.8 percent from 8.7 percent and at 13 percent from 23.1 percent, respectively.
“Similar to the current quarter, respondents cited expectations of high prices of goods, low salary or income, and rise in expenditures as reasons for their less upbeat outlook for the near term and the year ahead,” the report said.
Consumer outlook is measured across three component indicators--the country’s economic condition, family financial situation, and family income.
On the economic condition and family financial situation components, the confidence index reverted to negative territory. Family income stayed in the positive zone but still declined from the previous quarter.
Consumers are also pessimistic about the economic condition in the next quarter, but are more optimistic about the family income.
The weak sentiment was felt across all income groups for the third and fourth quarter and the year ahead.
Low and middle income groups were pessimistic because of their expectation of higher household expenses with no income increase. For the high-income group, they anticipated peace and order problems and the continued depreciation of the peso.
Respondents expect to spend more on basic goods and services, especially on fuel, transportation, water, electricity, food and non-alcoholic and alcoholic beverages.
Big-ticket purchases may also be on hold, with respondents citing the need to prioritize food and other basic needs.
According to the report, the percentage of those who intend to buy big-ticket items slightly dropped to 10.2 percent from 11 pecent for the second quarter. “However, buying intentions for the year ahead remained broadly steady as intentions to buy motor vehicles and real estate remained steady but weakened for consumer durables.”
Households with savings also declined to 32.5 percent from 37.4 percent in the second quarter. Among households with savings, 66.2 percent have bank accounts, up from 61 percent in the previous quarter.
However, majority of those who had savings (46.5 percent) kept their savings at home. The rest put their money in cooperatives, credit or loan associations and in investment instruments such as insurance.
Respondents said they saved for emergencies, health and hospitalization, education, retirement, purchase of real estate, and business capital and investment.
While the government’s economic team has proposed several solutions to keep inflation within target range, consumers anticipate inflation to increase, interest rates to go up and the peso to depreciate in the next 12 months.
Respondents expect the inflation rate to be around five percent, above the government’s two to four percent target range.
Of the over 5,000 households surveyed, 449 said they received overseas remittances for the third quarter. Of this number, 94.4 percent used the remittances to purchase food and other household needs. Those that used their remittances for savings and investment declined.
Almost one-third of the respondents declared they had outstanding loans. Debt-to-income ratio for the quarter rose to 43.4 percent, higher than the previous quarter’s survey results of 27 percent.
The third quarter’s survey was conducted from July 1 to 14. (MEA)