THE consumer outlook in the Philippines was more pessimistic for Q4 2023 as the overall confidence index (CI) became more negative at -19 percent from -9.6 percent in Q3 2023.
This is reflective of the combined decrease in the percentage of optimists and increase in the percentage of pessimists. The weaker confidence among consumers stemmed from their concerns about the: (a) faster increase in the prices of goods, (b) lower income, (c) fewer available jobs, and (d) the effectiveness of government policies and programs on inflation management, public transportation, and financial assistance to low-income households.
For the next quarter (Q1 2024) and the next 12 months, consumer optimism weakened as the CIs declined to 5.6 percent and 15 percent (from 7.8 percent and 18.9 percent in the Q3 2023 survey results), respectively.
In Q4 2023, consumer outlook is more pessimistic across the three component indicators and across income groups. Across the three component indicators (i.e., country’s economic condition, family’s financial situation, and family income), consumers were more pessimistic for Q4 2023 as the respective indices of the component indicators became more negative. Similarly, consumer confidence for the current quarter deteriorated across the income groups, i.e., pessimism increased in the low- and middle- income groups, and optimism turned into pessimism in the high-income group.
Consumers are more hesitant about buying big-ticket items in Q4 2023. The consumer sentiment on buying big-ticket items for Q4 2023 was more pessimistic as the CI became more negative at -71.3 percent from -62.7 percent in Q3 2023.
The percentage of households with loans and savings declines in Q4 2023. In Q4 2023, 22.9 percent availed of a loan in the last 12 months, lower than the 26.6 percent recorded in Q3 2023. Further, the percentage of households with savings declined to 29.1 percent in Q4 2023 from 32.8 percent in Q3 2023.
Consumers expect higher inflation, interest and unemployment rates, and a weaker peso for all reference periods. Consumers anticipate that the interest and unemployment rates may increase and the peso may depreciate against the U.S. dollar for the current quarter, next quarter, and the next 12 months. Meanwhile, households also expect that the inflation may 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 Q3 2023 survey results. Specifically, consumers expect that the inflation rate may average at 6.9 percent for the next 12 months, which is above the upper end of the National Government’s inflation target range of 2 to 4 percent for 2023-2024.
