Consumer outlook ‘brightening’ amid softer inflation, ‘strong’ labor market — Fitch unit

Photo by Erik Scheel from Pexels

By: Ian Nicolas Cigaral,

Household spending in the Philippines is gathering steam on the back of easing inflation and improving labor market — fuelling consumer optimism, a Fitch unit said.

The credit and macro intelligence provider said private consumption, which has traditionally been the driving force behind growth in the country, would “remain buoyant” as inflationary pressures that crimped consumer spending last year “dissipates.”

The company added that falling unemployment and higher minimum wages should boost household consumption, although consumers are less upbeat about disposable income growth as earnings in the Philippines vary between sectors and region due to absence of a national minimum wage.

“Growing” inflows of cash sent home by Filipinos abroad to their families would also continue to buttress consumer spending, the Fitch unit said.

“The inflationary pressures that weighed on household consumption through the first three quarters of 2018 have dissipated, while a strong labour market backdrop will also prove supportive of household confidence and subsequently, consumption growth,” Fitch Solutions said.

“Consumer sentiment remains broadly steady, indicative of this brighter consumer outlook,” it added.

Price growth resumed its downtrend in June and stood at 2.7% driven by slower rate posted in food items. Year-to-date, inflation averaged 3.4%, well within the state’s 2%-4% annual target.

The article is first published HERE.