High levels of liquidity and continued solid growth in the domestic economy are feeding into the Philippines’ retail sector, with sales rising on a tide of improving consumer sentiment. However, the central bank could move to take some of the heat out of the market in an effort to counter the creeping inflation fuelled
High levels of liquidity and continued solid growth in the domestic economy are feeding into the Philippines' retail sector, with sales rising on a tide of improving consumer sentiment. However, the central bank could move to take some of the heat out of the market in an effort to counter the creeping inflation fuelled by supply side pressures.
According to the latest Bangko Sentral ng Pilipinas (BSP) consumer expectations survey released in mid-June, the confidence index rose 1.5 points in the second quarter. Although the index was still in negative territory (-17%), the figure suggests that shoppers will be more willing to make purchases.
A number of factors contributed to the rise. According to Rosabel B. Guerrero, director of the BSP's Department of Economic Statistics, “Respondents attributed their more favourable outlook to the availability of jobs as well as an increase in the number of employed family members, increasing family income due to higher salary, strong business activity and better harvest.”
Also supporting retail spending was the rise in remittances from Filipinos overseas. Cash transfers from workers abroad rose 5.2% in April, to $1.9bn for the month, according to data issued by the BSP on June 16, taking the January to April total to $7.4bn. The bank has forecast that 2014 remittances will break last year's record of about $23bn by 5%, making more funds available for consumer outlays.
Growing consumer demand, while supporting sales, is also driving inflation. Price increases reached a two-and-a-half-year high in May, rising to 4.5% year-on-year from 4.1% in April.