Philippine consumer confidence improves in third quarter

Filipino consumers became less pessimistic in the third quarter of 2026 as households expected higher earnings, new income sources and more stable employment, according to the Bangko Sentral ng Pilipinas.

The improvement matters because household confidence influences spending, saving, borrowing and major purchases, all of which affect domestic demand and business activity.

The gains, however, did not erase financial anxiety, particularly among lower-income households, while consumers continued to expect inflation to remain above the BSP’s 3% target.

The BSP’s Consumer Expectations Survey showed the overall confidence index for the current quarter improving to minus 29.8% in the third quarter from minus 42% in the second quarter.

The index for the next quarter improved sharply to minus 0.8% from minus 16.3%, bringing consumer sentiment close to neutral territory.

Confidence for the next 12 months strengthened to 9.1% from 0.2%, meaning optimists outnumbered pessimists about longer-term economic conditions and household finances.

A negative confidence index means pessimists outnumber optimists, while a positive reading indicates the opposite.

Higher earnings were cited by 25.6% of consumers who reported an improved outlook for the third quarter.

Another 20.1% cited expectations of new income sources, while 19% pointed to stable jobs.

For the fourth quarter, 27.2% of respondents with a favorable outlook cited higher earnings, 23.8% expected new income sources and 10.8% anticipated more job opportunities.

Consumers were more optimistic about the next 12 months, with 24.2% citing higher earnings and 19.3% expecting new sources of income.

Another 16.5% attributed their year-ahead optimism to perceived improvements in governance, accountability and leadership.

The improvement extended across income groups, although lower-income households remained the most pessimistic.

The current-quarter confidence index among low-income households rose to minus 39.2% from minus 50% in the second quarter.

Middle-income households improved to minus 32.1% from minus 44.5%, while the high-income group rose to minus 18.9% from minus 34.1%.

The BSP defines low-income households in the survey as those earning less than PHP 10,000 a month, middle-income households as those earning PHP 10,000 to PHP 29,999 and high-income households as those earning at least PHP 30,000 monthly.

Confidence also improved across the three components used to calculate the overall index.

The economic condition index rose to minus 59.4% from minus 71.1%, while the family financial situation index improved to minus 20.3% from minus 36.2%.

The family income index increased to minus 9.7% from minus 18.7%.

Households also showed more willingness to make major purchases over the next 12 months.

The buying intentions index for big-ticket items, including real estate, motor vehicles and consumer durables, improved to minus 71.3% from minus 75.9%.

At the same time, households appeared more cautious about routine spending and debt.

The saving intention index turned positive at 1.3% from minus 0.7%, while the borrowing intention index for the next 12 months slipped to minus 65.3% from minus 63.8%.

The BSP said stronger saving prospects, weaker plans for day-to-day spending and lower borrowing intentions suggested that households remained prudent in managing their finances.

Inflation remained a key concern.

Households’ year-ahead inflation forecast increased to 4% in the third quarter from 3.3% in the previous quarter.

The 4% forecast exceeded the BSP’s 3% inflation target for 2026 but remained within its 4% tolerance ceiling.

Among consumers expecting faster inflation, 38.7% cited what they perceived as limited measures to contain price pressures.

Another 37% pointed to rising food and utility prices, while 22% cited tighter supply conditions.

Consumers also expected inflation, peso borrowing rates and unemployment to increase during the current quarter, next quarter and next 12 months.

They expected the peso to depreciate against the U.S. dollar across all three reference periods.

The BSP said it continues to monitor developments in the Middle East and their possible effects on consumer and business sentiment, spending and investment.

These indicators are among the factors considered by the central bank in its monetary policy decisions.

The third-quarter Consumer Expectations Survey was conducted from July 1 to 13 and covered 5,476 households nationwide.

The sample consisted of 2,457 households in the National Capital Region and 3,019 households outside the NCR.

Samples were drawn from the Philippine Statistics Authority’s 2023 Geo-Enabled Master Sample for household-based surveys.

The nationwide response rate was 98.9%, with a sampling error margin of plus or minus 1.3 percentage points.