12-month inflation, interest rates to drop — BSP survey

Inflation and interest rates will drop over the next 12 months, according to consumers in latest confidence survey of the central bank.

Bangko Sentral ng Pilipinas assistant Gov. Maria Cyd Tuano-Amador noted that the consumer confidence index in the third quarter improved to -14 percent from -28.7 percent a quarter earlier.

Amador said the improvement augurs well for the broader economy in the coming months as consumer sentiment leads consumer activities down the line.

“While still in negative territory, the confidence index increased from -28.7 percent in Q2 2010 to -14 percent, the highest reading since the nationwide survey started in 2007,” said Rosabel Guerrero, director of the BSP Department of Economic Statistics.

“Expectations of good governance were another major reason cited by respondents for their favorable outlook. With consumer spending about 70 percent of the gross domestic product, the record high consumer confidence boosted expectations of a more robust economy going forward,” Guerrero added.

She noted that consumer perception focusing on the country’s economic condition was at its highest in the third quarter survey since the activity was started three years ago.

All consumer income groups also posted record high optimism, especially the high-income group that showed the highest confidence level, Guerrero said.

Middle-income families proved the most optimistic, while low-income families showed the weakest confidence, she added.

Although Metro Manila respondents were more positive about their family’s financial situation than those outside the Nation Capital Region, countryside consumers held a better economic outlook than those in Metro Manila.

Fewer consumers in the third quarter survey expected a rise in expenditures, Guerrero said.

NCR respondents were also more upbeat about buying big-ticket consumer items down the line as they see domestic interest rates falling against a backdrop of more subdued inflation, she added.

The index for the unemployment outlook also dropped to 7.9 percent from 52.4 percent in the second quarter, “indicating that consumers believe that the unemployment rate will decline considerably in the next twelve months,” Guerrero said. —JE/VS, GMANews.TV