Pessimism grows amid rising prices — BSP poll

By Ruben Hortelano

06/13/2008

Consumer confidence fell drastically in the second quarter as households feel the impact of oil price increase and global rice crisis, a periodic survey of the Bangko Sentral ng Pilipinas (BSP) showed yesterday.

The consumer confidence index (CI), dropped to negative 43.8 percent, down by 11.7 index points from the previous quarter and by 17.8 index points a year ago, according to the BSP.

The BSP said the result of the survey showed more than four out of 10 respondents were pessimistic on the economy.

The recent confidence index was at its lowest level since the Consumer Expectation Survey covered the entire country at the start of last year, according to BSP economic research director Lou Sicat.

The negative outlook on economic conditions was anticipated to persist over the near term, according to the BSP.

It said the index for the next quarter dropped to a negative 26.9 percent from negative 3.4 percent in the previous quarter and from negative 6.7 percent a year ago.

In the outlook for the next year, the CI dropped to a negative 20.3 percent from 6.6 percent in the first quarter and from 5.8 percent in the same period last year.

Among the reasons cited for the weak outlook were the anticipated higher cost of goods and services, higher household expenses and lower income.

By income group, the survey showed consumers from low income and middle income households were most vulnerable to rising prices.

The family income index for the high income households remained positive at 13.8 percent, which improved by 3.7 index points from 10.1 percent in the first quarter last year while that for the low and middle income households decreased, according to the BSP survey.

While more households from the middle and high income groups expected that their family income would continue to improve in the next quarter and next year as indicated by the positive CIs, their number declined.

During the same horizon, meanwhile, outlook of the lower income households reverted back to negative after it registered positive in the past four consecutive quarters.

Consumers both from the National Capital Region and those outside the capital are pessimistic in the second quarter and in the near term horizon.

Both the country’s economic condition and family financial situation indices were negative and declined across all income groups, according to the BSP.

Similarly, the outlook on family income declined except for the high income group where the index remained positive and improved in both areas. Over the near term horizon, consumer confidence from both areas remained weak.

Expenditures on basic goods and services were expected to rise in the second quarter with the index at 57.9 percent mainly due to an expected further increase in prices of basic goods and services.

The number of those who indicated that their expenditures would go up increased relative to the previous quarter’s survey as the CI rose by 21.1 index points relative to the level a quarter ago and by 24.5 index points year-on-year.

As in past surveys, respondents nationwide indicated that their expenditures in the second quarter would rise, particularly on food, transportation, fuel, electricity, education, and personal care and effects.

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