Consumer confidence improves in Q1 2026, outlook dims for rest of year

Filipino consumers grew less pessimistic in the first quarter of 2026, but their outlook for the next quarter and the year ahead softened on concerns over graft, corruption, and higher inflation, the Bangko Sentral ng Pilipinas (BSP) reported.

Results of the BSP’s latest Consumer Expectations Survey (CES) showed the current-quarter confidence index (CI) improved to -15.8 percent in Q1 2026 from -22.2 percent in Q4 2025, reflecting reduced pessimism among households.

Respondents were less downbeat as they expected higher earnings, more stable employment, additional income sources, and more family members joining the workforce.

The next-quarter CI, however, declined to 1.8 percent from 3.6 percent, while the year-ahead CI eased to 9.6 percent from 11.8 percent. The BSP attributed the weaker outlook to concerns about graft and corruption, which respondents said could undermine the delivery of public services, alongside higher inflation and ineffective government policies and programs.

Inflation expectations remained well-anchored. Households’ year-ahead inflation forecast inched up to 2.7 percent from 2.6 percent, settling below the BSP’s 3.0-percent target for 2026 but within the ±1.0 percentage-point tolerance range.

The Q1 2026 CES was conducted from January 22 to February 5, 2026, before the onset of the ongoing Middle East conflict. The survey covered 5,440 households nationwide, with 2,475 from the National Capital Region (NCR) and 2,965 from areas outside the NCR (AONCR). The nationwide response rate was 98.5 percent, with a sampling error margin of ±1.3 percent.

Across component indices, the CI for family financial situation improved to -6.2 percent from -14.6 percent, while the economic condition index rose to -40.4 percent from -48.4 percent. The family income index moved to -0.8 percent from -3.5 percent.

Confidence improved across all income groups in Q1 2026. The low-income group’s CI rose to -24.7 percent from -37.0 percent, the middle-income group’s to -17.2 percent from -21.0 percent, and the high-income group’s to -7.9 percent from -12.9 percent.

By geographical area, consumers in both the NCR and AONCR were less pessimistic. The NCR’s current-quarter CI improved to -18.2 percent from -20.7 percent, while AONCR’s rose to -15.4 percent from -22.4 percent.

Spending outlook for the second quarter of 2026 was less upbeat, with the CI declining to 40.3 percent from 43.7 percent. Spending sentiment softened for food, non-alcoholic and alcoholic beverages, and tobacco; clothing and footwear; house rent and furnishing; gas and other fuels; health; transportation; information and communication; education, recreation, and culture; restaurants and accommodation services; and personal care and miscellaneous goods and services. Spending outlook was more upbeat for water supply and electricity.

Consumer sentiment on buying big-ticket items improved, with the current-quarter CI rising to -64.0 percent from -66.2 percent. Buying intentions for the next 12 months also turned less negative at -67.6 percent from -70.1 percent.

The share of households planning to buy or acquire real property within the next 12 months rose slightly to 6.6 percent from 6.2 percent. Of these, 58.6 percent indicated a preference for properties priced at PHP 450,000 and below, 23.8 percent for those between PHP 450,001 and PHP 1,700,000, and 17.6 percent for properties priced at PHP 1,700,001 and above.

The saving intention index climbed to 12.4 percent from 4.6 percent, with 73.9 percent of households that plan to save indicating they would set aside less than 10 percent of their monthly family income, up from 70.3 percent in the previous quarter.

Consumers expected interest rates and the unemployment rate to rise and the peso to depreciate against the US dollar in Q1 2026, Q2 2026, and over the next 12 months. Households cited concerns about higher food and grocery prices, ineffective government policies and programs to address inflation, and tighter food supply.

Of the 356 OFW household respondents who received remittances in Q1 2026, 96.1 percent used them for food and other household needs, 69.9 percent for education, 66.0 percent for medical expenses, 40.2 percent for savings, 32.9 percent for purchase of appliances or other consumer durables, 27.2 percent for debt payments, 17.1 percent for purchase of a house, 11.2 percent for purchase of a car or other motor vehicle, and 7.6 percent for investments.

The borrowing intention index improved to -69.5 percent for the next quarter and -62.1 percent for the next 12 months, from -71.7 percent and -64.5 percent, respectively, in Q4 2025.

The BSP said it continues to closely monitor the impact of the Middle East conflict on domestic prices and the broader economy, and stands ready to take appropriate monetary policy action should rising oil prices lead to more persistent inflationary pressures. The central bank has also issued regulatory measures to enable banks to assist affected clients.

The CES is a quarterly survey of about 5,500 households nationwide and serves as a key economic surveillance tool that provides input to the BSP’s monetary policy formulation.