Lower prices brighten RP consumer sentiments

MANILA, Philippines - Easing inflation and reports that the Philippines will avoid falling into recession have brightened consumer expectations somewhat for the year, the Bangko Sentral ng Pilipinas (BSP) yesterday said. Sentiment remained negative, with the consumer confidence index at -25.7 percent, but the first quarter result was an improvement from -40.3 percent for the final three months of 2008. “Improved consumer confidence was partly due to lower prices of oil and other food items, and positive news that the unfolding global financial crisis will not hit the Philippines as hard as other more advanced economies," BSP Director for Economic Statistics Iluminada T. Sicat told a briefing. The result of the central bank survey, conducted in January with over 5,000 respondents, was also a six percentage point improvement from the same period last year, she said. The index has historically never been positive, Ms. Sicat said, and “the mere fact that the index declined reflects that there were less pessimists this quarter." Overall consumer confidence was weighed down by households in the low income sector, or those earning P10,000 or less every month, which had a confidence level of -19.3 percent. It, however, was still an improvement of 7.5 percentage points from the previous quarter. Other respondents were more optimistic, with scores of 11 percent and 6.7 percent for high and middle income groups, respectively. Consumers in the low income segment made up more than 55 percent of respondents, the BSP said. Over a third were from the middle income group, or those making between P10,000-20,000 monthly, while the rest comprised high income respondents, or those who make over P30,000 every month. Most still expect expenses to rise in the next quarter, with the expenditures index at 40.7 percent, a slight decline from 44.9 percent in the previous quarter. “Respondents nationwide indicated that the increase in their expenditures would come from food, personal care, electricity, education and medical care," the BSP said. The peso, meanwhile, is expected to keep depreciating, with the confidence index at -10.8 percent from -19.8 percent in the previous quarter. With regard to interest rates, the index was at 45.4 percent from 46 percent. The inflation index, meanwhile, moderated to 8.6 percent from 8.8 percent. More people expect unemployment to rise, with an index of 72.4 percent from 71.1 percent. “Except for the unemployment rate index, all the indices showed that the number of respondents which expected weaker indicators in the next 12 months declined," the central bank said. Buying intentions for the next twelve months also improved to an index of 7.5 percent from 7 percent, with most respondents planning to buy either household appliances, automobiles or even real estate. BSP Deputy Governor Diwa C. Guinigundo said the result “is a good indicator of what to expect for the economy this year." An earlier BSP survey of 5,000 businesses in January showed a decline in confidence by about 15 points to 29.9 percent. The BSP consumer expectations survey started in 2004 in Metro Manila, and became nationwide only in 2007. For the latest poll, 5,487 households were surveyed between January 12 to 23. - Paolo Luis G. Montecillo, BusinessWorld