Consumer confidence is generally unchanged for Q4 2017

Consumer outlook was broadly steady for Q4 2017, with the overall confidence index (CI) decreasing slightly to 9.5 percent from 10.2 percent for Q3 2017. This means that the optimists continued to outnumber the pessimists but the margin for the current quarter was slightly lower relative to a quarter ago. The CI is computed as the percentage of households that answered in the affirmative less the percentage of households that answered in the negative with respect to their views on a given indicator.

Respondents indicated that their continued positive sentiment during the current quarter was on account of additional family income and higher salary, and availability of more jobs leading to an increase in the number of employed family members. However, their slightly less favorable outlook, which counterbalanced their positive views, was due to concerns on: (a) higher prices of goods and household expenditures, (b) peace and order problems (particularly, extra-judicial killings, drug issues and crisis in Marawi), (c) occurrence of calamities such as typhoon, and (d) poor health and high medical expenses.

For the next quarter (Q1 2018), consumers' optimism likewise remained steady, as the CI showed a fractional decline to 17.5 percent from 17.8 percent in the previous quarter's survey. Meanwhile, consumer outlook for the year ahead was less upbeat as the CI declined slightly to 32 percent from 33.7 percent a quarter ago.

Consumer confidence is measured across three component indicators, namely, the country's economic condition, family financial situation, and family income. For Q4 2017, consumer sentiment on the three indicators was mixed, as optimism was lower on the country's economic condition, steady on the family's financial situation and higher on family income. Notably, a record-high CI was posted on the outlook on family income (at 10.3 percent from 9 percent in the previous quarter). For the next quarter (Q1 2018), consumers' views on family finances and income turned more buoyant but that on the country's economic condition weakened. The same broad trends were observed for the year ahead.

Consumer outlook was also mixed across income groups for the current and next quarters and the year ahead. For the current quarter, the low-income group turned less pessimistic due to the availability of more jobs and good harvest. Meanwhile, the middle- and high-income groups both registered a positive but weaker outlook as they anticipated lower salary and higher household expenditures. For the next quarter and the year ahead, the sentiment of consumers was less favorable for the low-income group, steady for middle-income and was more upbeat for high-income.

Spending on basic goods and services is expected to rise for Q1 2018

The spending outlook index of households on basic goods and services increased to 34.9 percent for Q1 2018 (from 28.1 percent in the previous quarter). This means that respondents who expected to spend more on goods and services outnumbered those who said otherwise, and the number that said so increased compared to a quarter ago. The more upbeat outlook on consumer spending was observed across all commodity groups and geographical areas in both NCR and AONCR.

The percentage of households that considered the current quarter as a favorable time to buy big-ticket items increased to 31.9 percent from 30.2 percent for Q3 2017. The more favorable outlook on buying conditions was evident across all big-ticket items. For the year ahead, buying intentions of respondents across all big-ticket items likewise improved to 12.7 percent compared to 11.2 percent from the previous quarter's survey results.

The percentage of households with savings decreases for Q4 2017

For Q4 2017, the percentage of households with savings decreased to 35.6 percent from 36.8 percent in the previous quarter. The decline in the percentage was observed in both NCR and AONCR. According to respondents, they save money for the following reasons: (a) emergencies, (b) education, (c) health and hospitalization, (d) retirement, (e) business capital and investment, and (f) purchase of real estate. Almost two-thirds (65.4 percent) of household savers had bank deposit accounts while 45.6 percent kept their savings at home and 38.8 percent put their money in cooperatives, paluwagan, other credit/loan associations, and as investment (e.g., insurance (such as SSS and Pag-IBIG)).

Meanwhile, the percentage of respondents who reported that they could set aside money for savings during the current quarter edged up to 43.6 percent (from 43 percent for Q3 2017). However, the proportion of those that could set aside 10 percent or more of their monthly gross family income was lower at 37.1 percent (from 40.3 percent for Q3 2017).

Consumers expect inflation and interest rates to rise and the exchange rate to depreciate for the year ahead

The survey results showed that consumers anticipated inflation to increase but to remain within target, interest and unemployment rates to go up and peso to depreciate in the next 12 months. The number of respondents with views of higher inflation increased compared to that a quarter ago, reflecting stronger inflationary expectations over the next 12 months. Moreover, respondents anticipated the rate of increase in commodity prices to stay within the government's 2 to 4 percent inflation target range for 2017, at 3.6 percent over the course of the next 12 months (higher than the expected 3.2 percent in the Q3 2017 survey). Meanwhile, more respondents expected interest and unemployment rates to rise and the peso to depreciate against the US dollar over the next 12 months compared to a quarter ago.

OFW households that utilize their remittances for savings increases for Q4 2017

Of the 471 households included in the survey that received OFW remittances for Q4 2017, 97.2 percent used the remittances that they received to purchase food and other household needs. The proportion of households that said so as well as those that allotted part of their remittances for education (62.6 percent), purchase of consumer durables (23.4 percent), purchase of house (14.2 percent), and investment (5.9 percent) declined. Meanwhile, the percentage of OFW households who allocated part of their remittances for medical expenses (54.1 percent), savings (42.3 percent), debt payments (42 percent), purchase of motor vehicle (8.5 percent) and other miscellaneous expenses (3 percent) increased.

Source: Bangko Sentral ng Pilipinas (BSP)