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Q1 Consumer confidence slips to lowest level in almost two years —BSP

The confidence of Filipino consumers dipped to the lowest level in almost two years during the first quarter of the year, data released by the Bango Sentral ng Pilipinas (BSP) on Monday showed.

According to the central bank, the confidence index (CI) plunged to 1.7 percent in the first quarter of 2018 from 9.5 percent in the fourth quarter of 2017 and 8.7 percent in the first quarter of 2017.

It was the lowest since the CI registered at 2.5 percent in the third quarter of 2016.

“According to respondents, their less favorable sentiment was mainly due to their expectations of higher prices of goods, low income, and rise in household expenses,” Rosabel Guerrero, senior director of the Department of Economic Statistics, said in a press briefing in Manila.

“Respondents also cited concerns on increase in household debts, occurrence of typhoon and other calamities, and poor harvest,” she said.

The CI was obtained from the Consumer Expectancy Survey (CES) of the BSP which was conducted from January 24 to February 3 this year.

The CES samples were drawn from the Philippine Statistics Authority (PSA) Master Sample List of Households, which is considered by the central bank as a representative sample of households nationwide.

The sample size was 5,569, with 5,400 or 97 percent responding to the survey.

“The less optimistic consumer sentiment in Q1 2018 was carried to the near term and the next 12 months due to anticipation of continued increase in prices of goods that, in turn, increase household spending, as well as low earnings of the family,” the BSP said.

BSP Assistant Governor Francisco Dakila noted one of the respondents attributed the outlook to the passage of the government’s tax reform law.

“There’s only one respondent who specifically cited the TRAIN (Tax Reform for Acceleration and Inclusion) ... We don’t want to inject our own interpretation into the reasons given by the survey respondents,” he said.

The proposed tax reform was signed into law by President Rodrigo Duterte on Dec. 19, 2017. It lowered the personal income tax rates and expanding the value-added tax (VAT) base starting January.

Results of central bank survey showed that consumers anticipated inflation to increase, interest rates to go up, and the peso to depreciate in the next 12 months.

“The number of respondents with view of higher inflation increased compared to that a quarter ago, reflecting stronger inflationary expectations over the next 12 months,” the BSP said.

“Respondents anticipated the rate of increase in commodity prices to be above the government’s 2 to 4 percent inflation target range for 2018, at 4.7 percent over the course of the next 12 months,” it said. —VDS, GMA News