Filipino Consumer Confidence Drops Amid Inflation Fears

By Francis Allan L. Angelo

Filipino consumer confidence dipped further in the first quarter of 2025, driven by persistent concerns over rising prices, shrinking household income, and worsening employment prospects, according to the Bangko Sentral ng Pilipinas (BSP).

In its latest Consumer Expectations Survey (CES), the BSP reported that the overall consumer confidence index (CI) fell to -13.0 percent in the first quarter from -11.1 percent in the previous quarter and -10.9 percent in the same period last year.

A negative index signals that pessimists outnumber optimists.

Respondents cited a faster increase in the prices of goods and services, fewer job opportunities, and declining incomes as the primary reasons for their outlook, compounded by what the BSP called “recent political developments” that may undermine public trust in the government’s economic initiatives.

“The heightened pessimism among consumers… is due in part to their perceived negative impact on the effective delivery of government programs,” the CES report stated.

Despite the gloomier short-term view, consumers maintain a more optimistic outlook over the next 12 months.

The CI for the year-ahead sentiment stayed positive at 12.4 percent, consistent with the previous quarter but slightly lower than 13.4 percent a year ago.

This forward-looking optimism was supported by expectations of more job opportunities, salary increases, and a potential rise in household incomes.

Confidence was split across income groups.

High-income and low-income households became more pessimistic in Q1 2025, while the middle-income group’s outlook remained nearly unchanged.

Among low-income households, the CI dropped sharply to -24.7 percent from -21.1 percent in Q4 2024.

Meanwhile, the high-income group’s CI slid to -6.6 percent from -1.5 percent.

BSP data also showed confidence waned across geographic regions.

The CI in the National Capital Region fell to -15.1 percent, and Areas Outside NCR (AONCR) dropped to -12.7 percent.

Spending expectations also turned cautious, with the spending outlook index declining to 40.1 percent from 45.7 percent in Q4 2024.

Households were particularly less upbeat about spending on essential goods such as food, transportation, and healthcare, though they showed more willingness to increase spending on utilities like water and electricity.

The sentiment toward purchasing big-ticket items such as homes and vehicles also weakened.

The CI on buying intentions for the next 12 months fell to -68.7 percent from -64.2 percent previously, reflecting rising uncertainty.

Nonetheless, the proportion of households planning to acquire real property in the next year rose to 5.7 percent from 5.0 percent in the last survey.

More households reported interest in buying agricultural lots, townhouses, and apartments.

A majority of those buyers—about 51.5 percent—are eyeing properties priced at PHP450,000 or lower.

Amid this complex landscape, consumers remain wary of borrowing.

Although the borrowing intention index for Q2 2025 and the next 12 months became less pessimistic—rising to -71.6 percent and -66.2 percent, respectively—many still expect loan applications to be challenging.

Inflation expectations among households remain elevated, though easing slightly.

The survey showed that households forecast a 3.8 percent average inflation rate over the next year—within the government’s target range of 2.0 to 4.0 percent for 2025–2026.

OFW remittances continue to provide critical support to household spending.

Nearly 97 percent of remittance-receiving households used funds for food and daily necessities.

Spending on education and debt payments rose, but fewer households used remittances for savings or investments compared with the previous quarter.

BSP reiterated its commitment to keeping inflation manageable, with monetary policy decisions informed in part by CES data.

“The survey results provide advance indications of consumer sentiments… that influence consumption, saving, and investment behavior,” the BSP noted.

While near-term sentiment remains cautious, the sustained optimism for the next year signals hope for a gradual recovery—provided inflation stays contained and job markets stabilize.