BUSINESS SENTIMENT worsened for the next 12 months, with consumers less likely to spend amid rising oil and food prices, according to the Philippine central bank.

The Bangko Sentral ng Pilipinas (BSP) confidence index fell to 59.9% from 69.8%, according to the results of its Business Expectations Survey.

“The less upbeat business outlook of most of the regions was due to perceived uncertainties brought about by the government transition to a new administration, seasonal decline in production during the rainy season and expectation of higher inflation due to rising fuel prices,” according to the report.

Business expectations surveyFerdinand R. Marcos, Jr. took his oath as Philippine president on Thursday, vowing to fulfill his promises to Filipinos including better improving their quality of life.

The Marcos administration inherited some global issues affecting the Philippines, including spiraling oil and food prices caused by Russia’s invasion of Ukraine.

“Further, business confidence for the next 12 months was weighed down by concerns over the inoculation targets not being met, China lockdowns and possible stagflation due to the Ukraine-Russia conflict,” the BSP said.

Meanwhile, households expect the prices of consumer goods and services to rise faster in the third quarter, the central bank said, citing Consumer Expectations Survey.

The spending outlook of households on goods and services for the third quarter was less upbeat as the consumer index declined to 38.3% from 40.4%.

“This suggests that while more respondents continue to expect higher spending on basic goods and services, a moderation in spending among consumers is expected for Q3 2022,” according to the report.

This may also reflect adjustments in consumers’ spending patterns related to their expectations of higher inflation.

“Businesses are expecting that inflation will settle at 4% for Q2 2022, and at 4.1% for Q3 2022 and the next 12 months (from 4.2% across said periods in the Q1 2022 survey results),” the central bank said.

The inflation expectation of companies in the near term is above the upper end of the government’s 2–4% target.

Companies also expect a weaker peso and higher borrowing and inflation rates in the near term.

“Businesses expect that the peso may depreciate against the US dollar in Q2 and Q3 2022, and in the next 12 months,” it said.

The peso closed at P55.09 a dollar on Friday, losing 11.5 centavos from its Thursday finish. It was its weakest close in more than 16 years, or since it close at P55.26 on Oct. 25, 2005.

The BSP surveyed 1,509 companies for its Business Expectations Survey on April 18 to June 1. It also surveyed 5,437 households for its Consumer Expectations Survey on April 25 to May 5. — Keisha B. Ta-asan