Bangko Sentral: Q1 consumer confidence level plummets to -21.3%

(Updated 10:09 p.m.) Filipinos have lost their confidence as consumers in the midst of rising oil and food prices, fueled by crude supply disruptions in the Middle East and North Africa, the Bangko Sentral ng Pilipinas (BSP) said Thursday, citing its survey. The earthquake-triggered disasters in Japan this month and in New Zealand in February added to depress consumer sentiments in the country, according to the BSP’s 1st Quarter Consumer Expectation Survey, which showed that the consumer confidence index level from January to March plummeted to minus 23.1 percent from minus 8.5 percent in the fourth quarter of 2010. The 1st Quarter 2011 Consumer Expectation Survey (CES) showed that consumer confidence index in the January-March period plummeted to -23.1 percent from only -8.5 percent in the fourth quarter of 2010 as the number of pessimistic Filipino consumers increased relative to the number of optimists. The steep decline in the confidence level of Filipino consumers may be an "aberration" considering the negatives were triggered by factors outside the Philippines, BSP Deputy Gov. Diwa Guinigundo said in a press conference. Guinigundo said the central bank is keeping its fingers crossed that the index will turn positive in the first quarter of the year, after improving steadily from -28.7 percent in the second quarter of last year, to -14 percent in the third quarter, and -8.5 percent in the fourth quarter. "We thought that it will show significant improvement and will go to a positive territory, but what we saw was a bigger deterioration," he said. Guinigundo said the survey — conducted from March 14-21 covering 5,920 respondents — factored in the tensions in MENA states, the magnitude-6.3 earthquake in New Zealand last February, and the magnitude-9.0 earthquake that triggered the ensuing tsunami and nuclear reactor crisis in Japan. Consumer sentiments on the economic condition of the country, financial income, and family financial situation plunged in the first quarter with the rising cost of basic commodities, expected high unemployment rate and low incomes, he said. Mirroring sentiments overseas Director Rosabel Guerrero of the BSP Department of Economic Statistics said the Philippine outlook mirrored the weaker sentiments of consumers in the US, UK, Japan and Thailand, Australia and New Zealand, and higher fuel prices. Apart from the US and UK, whose economies were ravaged by the global depression, the Australia and New Zealand suffered from flooding and earthquake, respectively early this year. “Households that responded to the survey cited the continued increase in the prices of petroleum products, the high cost of goods and services, and the rise in household expenses as the reasons behind their weaker outlook," Guerrero said. Inflationary pressures and unemployment rate More Filipino consumers expect interest and inflation rates to head up north in the next 12 months with rising oil prices exerting pressure on prices of basic commodities. Inflationary pressures prompted the Monetary Board on March 24 to raise by 25 basis points the central bank’s policy rates, bringing the overnight borrowing rate to 4.25 percent and the overnight lending rate to 6.25 percent. Guerrero said respondents also see the unemployment rate rising with the more overseas Filipino workers (OFWs) being displaced by the disaster in Japan the seething unrest in MENA states. If ever, Guinigundo said the resolution of social conflicts hounding MENA states and the reconstruction efforts in Japan will help improve the confidence level of Filipino consumers in the next quarter. — VS, GMA News