Filipinos likely cut down on non-essential spending amid looming inflation — BCG
AMID higher projected inflation due to volatile oil prices, Filipinos are likely to cut down on non-essential spending while seeking cheaper options for essential items, according to global management consulting firm Boston Consulting Group (BCG).
The statement was made in response to BusinessWorld’s questions regarding online shopping platform Shopee’s aggregated consumer behavior data from its March 3.3 sale.
Shopee’s report showed that while Filipinos’ top searches on the platform are for fashion-related items, their actual checkout behavior prioritizes everyday essentials, leaving limited room for discretionary purchases.
According to the Bangko Sentral ng Pilipinas on Tuesday, the inflation rate in March may accelerate to between 3.1% and 3.9%, faster than the 1.8% posted a year ago and 2.4% in February.
The higher rate is driven by costlier fuel, electricity, rice, and the peso’s dip against the US dollar.
Last year, BCG asked whether Filipinos are likely to continue their spending behavior amid impending higher inflation. It said that a majority of survey respondents, or 77%, expressed that they would cut overall discretionary spending if prices increased. The survey was released in June.
“For everyday essentials, especially fresh food, consumers tend to find cheaper options,” Lance Katigbak, principal of BCG, said in an e-mail interview with BusinessWorld.
“Filipinos tend to cut down on indulgences like alcohol, packaged snacks, and dining out, and delay big-ticket items such as furniture or appliances,” he added.
As financial security remains the number one priority for Filipino households, Mr. Katigbak said this behavior stems from the fact that inflation has been growing faster than wages, prompting families to be more financially prudent.
“So, in some ways, they have no choice but to prioritize essentials over wants,” he said.
However, not all spending is limited to essentials, as Filipinos may still make small personal purchases, BCG said.
In the recent March sale, Shopee said that alongside essential items, some of the top purchases from Shopee Mall stores included personal items such as lip tints, snack packs, and long-wear lipsticks.
Based on its report, Shopee said Filipino buyers are generally not impulsive and often stick to shopping lists focused on necessary items. — Edg Adrian A. Eva
