Retailers ‘optimistic,’ consumers ‘pessimistic’

Business.
Business.(Business File photo)

A RETAIL player is ringing in 2024 with optimism and momentum, capitalizing on the government’s planned increased spending for the year, cooling inflation and a generally upbeat outlook in the economy.

“We are hoping that it would be better because as our suppliers, the manufacturers have told us that the worst is over unless there is another war or something else happens out of the blue. But hopefully, it will be more stable this year and consumers will recover,” said Rina Janine Go, chief merchandising, marketing and distribution officer of Prince Retail Group of Companies.

According to Go, 2023 took a toll on retailers and consumers’ wallets, as prices of rice, sugar, oil, sardines and canned goods rose by at least eight percent compared to 2022.

“The value of what they spent has not changed, but the volume has drastically reduced,” she said.

“Rice being the basic is one that is bought first, so everything else will fall behind. We saw non-food items dropping out or they switched to lower price brands. So it has been difficult,” Go said.

Prince Retail has 73 stores nationwide. It is present in 24 provinces and nine regions, including in central and south Luzon. The retail firm aims to hit 100 branches in a few years.

The Bangko Sentral ng Pilipinas (BSP) projects inflation last December to settle within the range of 3.6 to 4.4 percent. It said higher prices of rice and meat were seen as primary sources of upward price pressures in December.

Gains, improvements

Meanwhile, lower prices for agricultural items such as vegetables, fruits and fish along with lower electricity rates and petroleum prices are expected to contribute to downward price pressures.

The December inflation report is scheduled for release by the Philippine Statistics Authority on Friday, Jan. 5.

“I think there are some gains already on the minimum wage, and I think there are improvements also to the prices of suppliers. They are also scaling back because a lot of manufacturers saw that their sales fell by double digits. A lot of it is tempering, but we are not yet back to the very, very high double digits that we were used to pre-pandemic as the economy and the base of the pyramid, the farmers and fisherfolk are hard up and they may take time to recover,” Go said.

According to the Fourth Quarter BSP’s Consumer Expectations Survey, for the first quarter of 2024 and the next 12 months, consumer optimism weakened as the confidence index (CI) declined to 5.6 percent and 15 percent (from 7.8 percent and 18.9 percent in the third quarter of 2023 survey results), respectively.

The less upbeat outlook among consumers for both periods was attributed mainly to their expectations of a faster increase in the prices of goods, lower income and fewer available jobs.

Consumers’ sentiment was less favorable among the low- and middle-income groups but remained buoyant among the high-income group compared with their views a quarter ago. For the year ahead, the sentiment of consumers across all income groups is less upbeat.

The spending outlook index of households on goods and services for the first quarter of 2024 is more upbeat as the CI increased to 46.7 percent from 40.9 percent in the previous quarter’s survey results, which suggests that the pace of consumer spending may continue to accelerate in the next quarter. Spending is expected to generally increase at a faster rate for all consumer items.

Inflation expectation

The results of the survey also revealed that households also expect inflation to increase at a faster rate for all reference periods as the number of respondents who expect higher inflation for said periods increased compared with the third quarter survey results.

Consumers cited the following reasons for their inflation expectations: higher household spending for food, limited supply of goods and services, concerns over the effectiveness of government policies and programs in addressing elevated inflation, and depreciation of the peso against the US dollar.

Specifically, consumers expect the inflation rate to average 6.9 percent for the next 12 months, which is above the upper end of the National Government’s inflation target range of two to four percent for 2023-2024.

The government approved in December 2023 a national budget of P5.768 trillion for 2024, allocating the biggest appropriation to social services and economic services sectors.

“The early signing of the annual budget and its spending allocations will be a big help to uplifting growth in our economy in 2024,” said entrepreneur Steven Yu, past president of the Mandaue Chamber of Commerce and Industry.

This year’s national budget is 9.5 percent higher than the 2023 budget and represents about 21.7 percent of the country’s gross domestic product.

Among the government agencies, the Department of Education was allocated the highest budget of P924.7 billion, closely followed by the Department of Public Works and Highways with P822.2 billion. The Department of Health was allocated P306.1 billion.

Charles Kenneth Co, president of the Cebu Chamber of Commerce and Industry, hopes the national budget will be enough “to pump prime the country’s growth.”

“Businesses also need to do their part in paying the right taxes for the government to fund the projects in 2024,” he said.

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