Consumers still optimistic amid slide of index due to higher commodity prices

MANILA - Consumer confidence in the second quarter of 2017 slid a bit due to impact of increases in commodity prices, poor harvest and unfavorable weather conditions.

Bangko Sentral ng Pilipinas (BSP), in press release issued Friday, said confidence index this quarter fell to 8.7 percent from quarter-ago’s 9.2 percent but pointed out that the latest index is the second highest since the survey was done nationwide starting in the first quarter of 2007.

Prices of commodities registered faster pace in the first two months this year, resulting to the uptick in the rate of price increases, with the February alone rising to 3.3 percent from last January’s 2.7 percent.

The major contributor to faster inflation rate last February is the hike in the heavily weighted food and non- alcoholic beverages index, which rose to by 4.1 percent.

Average inflation in the first two months this year stood at 3 percent, mid-range of the government’s two to four percent target for this year until 2018.

The central bank’s policy-making Monetary Board (MB) on Thursday cut its average inflation projection for 2017 to 3.4 percent from 3.5 percent previously while the 2018 projection was reversed downwards to three percent from 3.1 percent last February.

Monetary officials have expected the rise of inflation rate this year on account of hikes in oil prices and weather-related factors but maintain that inflation rate is not expected to surpass the target.

Despite the impact of higher expenses from basic commodities, s ome respondents remained optimistic due to the improvement in the country’s peace and order situation, the additional family income due to increase in salary and stronger business activity, availability of more jobs and increase in the number of family members who have jobs, and effective government policies.

In terms on outlook on economic indicators, the respondents expect inflation to sustain its rise along with that of the interest rate and for the peso to depreciate against the US dollar.

The survey was done nationwide from Jan. 19-31, 2017 and received a response rate of 96.1 percent. Respondents were taken from the Philippine Statistics Authority’s master sample list of households.