Consumers were less pessimistic in the first quarter due to their positive outlook on the availability of more jobs and permanent employment, higher income, and continued recovery from the public health crisis, according to the Philippine central bank.

The consumer confidence index (CI) fell 10.4% in the first three months of the year, better than the 14.6% drop in the previous quarter, according to a statement issued by the Bangko Sentral ng Pilipinas (BSP) on Friday.

This was, however, the 11th consecutive quarter of pessimism, or since the 54.5% drop in the third quarter of 2020.

BSP survey: Filipino consumers to spend more in Q2

The number of households with optimistic views increased, but this was still outnumbered by those with pessimistic views.

For the second quarter, the index remained positive but fell to 7.5% from 9.5% the previous quarter.

Meanwhile, consumer confidence for the next 12 months inched up to 22.7% from 21.7% in the previous quarter.

According to the BSP, consumer sentiment was less pessimistic across all income groups in the first quarter.

“Consumers cited that their improved outlook for Q1 2023 was due to their optimism about more available jobs and permanent employment; higher income from wages/salaries, remittances, and other sources; and positive developments in the country’s COVID-19 situation such as the relaxation of vaccination, testing, and masking requirements, fewer COVID-19 cases, and post-pandemic recovery of businesses as workers return to their office,” the BSP said.

Consumers expect rising interest rates, persistent inflation, and low unemployment rate in the near term.

“For Q1 and Q2 2023, and the next 12 months, consumers anticipate that the interest rate may increase, the peso may depreciate against the US dollar, and the unemployment rate may decline,” the central bank said.

“Consumers also expect that the inflation rate may rise for the reference periods. In particular, consumers are expecting that the inflation rate may average at 6.2% for the next 12 months, which is above the upper end of the National Government’s inflation target range of 2-4% for 2023-2024,” it added.

Inflation slowed to 7.6% in March from 8.6% in February. However, this still marked the 12th straight month that inflation breached the BSP’s target.

To tame inflation, the BSP has raised rates by 425 basis points since May 2022, bringing the benchmark rate to 6.25%.

The central bank interviewed 5,467 consumers for the survey, held between Jan. 19 to 31. — Luisa Maria Jacinta C. Jocson