Inflation, interest rates may dampen retail sector growth in 2023

Photo from: BusinessWorld

By BusinessWorld

The Philippine retail sector’s growth is projected to slow next year, as consumer spending will likely be affected by elevated inflation and rising interest rates.

Barsali Bhattacharyya, Economist Intelligence Unit (EIU) industry manager, told BusinessWorld that local retailers will be affected by weaker consumer spending.

“In 2023, the pace of growth will slow to 2.7% as persistently high inflation and the increase in domestic interest rates hurt consumers’ spending power,” Ms. Bhattacharyya said via e-mail.

The Bangko Sentral ng Pilipinas (BSP) has raised benchmark rates by 225 basis points so far this year to tame inflation and address the peso’s weakness.

Inflation accelerated to 6.9% in September, bringing the nine-month average to 5.1% as prices of food, commodities and utilities continue to rise. The BSP expects inflation to average 5.6% this year, and 4.1% in 2023.

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