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Household spending rises 5.9% in 2017 — PSA

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wet market household spending
PHILSTAR

By Carmina Angelica V. Olano

HOUSEHOLD SPENDING increased 5.9% in 2017 though 13 of 17 regions posted slower growth rates, according to data released by the Philippine Statistics Authority (PSA).

Household spending, which accounts for 68.9% of total expenditure, was P5.97 trillion in 2017, it said.

Per-capita household spending rose 4.2% to P56,936 in 2017.

Central Luzon posted the highest growth in per capita Household Final Consumption Expenditure at 6.0% to P66,390. However, this was slower than the 7.5% growth rate posted in 2016.

Davao Region (P47,477) and Western Visayas (P49,043) followed with growth rates of 5.4% and 5.3%, respectively, slowing from the year-earlier 7.1% and 5.5%.

Per-capita household spending growth in the National Capital Region slowed to 3.5% in 2017 from 5.6% a year earlier, but was the highest nationwide at P106,335.

Other regions that posted slower growth in household spending were Cordillera Administrative Region (2.7% from 3.8%); Ilocos Region (4.1% from 5.6%); Calabarzon (4.8% from 5.1%), Bicol Region (4.1% from 4.9%); Western Visayas (5.3% from 5.5%); Central Visayas (4.0% from 5.5%); Eastern Visayas (4.2% from 8.3%); Zamboanga Peninsula (2.9% from 4.4%); Northern Mindanao (2.7% from 4%); and Soccsksargen (3.3% from 4.5%).

Only four regions saw acceleration in per capita household spending growth — Mimaropa, Cagayan Valley, Caraga, and the Autonomous Region in Muslim Mindanao (ARMM).

Michael L. Ricafort, an economist with Rizal Commercial Banking Corp. (RCBC), attributed last year’s increase in spending to “improved household incomes amid growth in overseas Filipinos worker (OFW) remittances and improvement in overall employment prospects.”

“[T]he continued growth in employment in BPOs (business process outsourcing) and other services, [the] pick-up in manufacturing, [the] record high foreign direct investments… continued growth in local investment” resulted in the creation of more jobs and business opportunities, he said.

Angelo B. Taningco, an economist with Security Bank Corp., concurred, adding that “buoyant” spending on domestic tourism and the “relatively low” inflation helped push household spending higher last year.

Nevertheless, the economists noted the slower growth rates in per-capita household spending in most regions.

“[It] may have been partly related to sharper price inflation in these areas,” Security Bank’s Mr. Taningco said.

RCBC’s Mr. Ricafort said that the deceleration in growth for most regions was due to base effects after higher spending in 2016 due to the elections and faster growth in OFW remittances.

They expect household spending to continue growing this year, but rapidly-rising inflation might offset these gains.

“Household spending growth this year [will] be moderate, supported by income tax cuts and minimum wage hikes on one hand but dampened by stronger inflationary pressures on the other hand,” Mr. Taningco said.

Mr. Ricafort added: “Household spending growth could be faster in 2018 amid higher household incomes and spending power after the reduction of individual income taxes” which were brought about by tax reform.

However, he noted the emergence of inflationary pressures from higher “passed-on” prices for consumer-related goods such as fuel, sweetened beverages, electricity, and rice.

Headline inflation hit a five-year high of 5.2% in June, bringing the year-to-date average to 4.3%, closing in on the central bank’s 4.5% forecast for 2018.