Consumer confidence slumps

CONSUMER confidence has flagged since October this year, with the sentiment expected to remain subdued well into the first quarter of 2010, according to the Bangko Sentral ng Pilipinas (BSP).

In the latest round of its Consumer Expectations Survey, the BSP said sentiment weakened in the fourth quarter this year, with most respondents fearful that the damage caused by typhoons Ondoy and Pepeng would lead to price spikes.

The poll results came a week after the National Statistics Office said that inflation shot up to a six-month high of 2.8 percent in November from 1.6 percent the month before.

Banks have since discounted no adjustment in the BSP’s policy rates up until the middle of next year, causing a flurry of domestic bond issuances by Philippine corporations.

In its latest survey, the BSP said the current quarter consumer confidence index (CI) slid to -36.0 percent in fourt quarter of 2009 from -31.9 percent in third quarter of 2009.

Similarly, the CI for the first quarter 2010 dropped to -10.5 percent from -3.7 percent in third quarter of 2009, the BSP said.

Despite the decline, the central bank said the current quarter outlook represented an improvement over a year ago, “when the Philippine economy slowed down to register the lowest growth rate in seven years at 2.9 percent.”

For the next 12 months, consumer sentiment indicated a “slight rebound, with consumers of the view that the effects of the recent natural calamities are temporary and that the economy could bounce back over the near term.”

The BSP said the three indicators of consumer confidence—economic condition of the country, family financial situation, and family income—fell quarter-on-quarter “as more consumers expected these indicators to worsen, compared to those who expected otherwise.”

High-income group remains upbeat

Despite the overall trend, “the high-income group remained broadly optimistic on balance about their family income and family financial situation in the short term,” the BSP said.

The middle-income and low-income groups were more pessimistic about the economy and their financial situation for the current quarter.

Household spending on basic goods and services in the fourth quarter is expected to rise, specifically food, electricity, transportation, fuel, clothing and footwear, as well as hotel and restaurant.

The number of households who shied away from buying big-ticket items also fell in the current quarter, as consumers opt “to give more priority to the purchase of basic household needs as their financial conditions were perceived to be less favorable given the general weakness in economic conditions.”

The same sentiment is expected to persist in the next 12 months, the BSP said. –MARICEL E. BURGONIO SENIOR REPORTER, Manila Times