Filipino consumers have become more pessimistic in the second quarter, primarily due to higher inflation, lower family incomes, and fewer job opportunities.

At the same time, businesses have expressed cautious optimism about the economy in the same quarter.

Results of the latest Consumer Expectations Survey (CES) of the Bangko Sentral ng Pilipinas (BSP) showed that the current-quarter overall consumer confidence index (CI) declined from -13 percent in the first quarter of 2025 to -14.0 percent in the second quarter.

A negative CI means more respondents are pessimistic than optimistic.

Despite the more downbeat sentiment for the current quarter, the consumer confidence index for both the next quarter and the next 12 months was positive, reflecting sustained consumer confidence in the near term.

Consumers also expect inflation over the next 12 months to remain within the National Government’s target range, indicating easing household inflation expectations. Within-target inflation supports investments and employment.

The CES is a key economic surveillance tool of the BSP, and its results are necessary inputs to the formulation of monetary policy.

They were primarily concerned about the potential impact of reciprocal tariffs on Philippine exports to the United States and uncertainty over their implementation.

The expected slowdown in business activity after the May midterm elections and the sugar off-milling season also weighed on business confidence, according to the BSP survey.

A separate Business Expectations Survey (BES) showed that the overall business confidence index decreased from 31.2 percent in the first quarter of 2025 to 28.8 percent in the second quarter.

A positive CI means more respondents are optimistic than pessimistic.

Execs moderately positive

Looking ahead, business confidence for the next quarter and next 12 months moderated, with CIs at 39.3 percent and 51.0 percent, respectively, both lower from their quarter-ago and year-ago levels.

Nevertheless, CIs for the next quarter and next 12 months remained positive, reflecting businesses’ continued optimism about near-term economic prospects.

Firms also expect inflation over the next 12 months to stay within the national government’s target range, indicating well-anchored business inflation expectations. Within-target inflation supports investments and job creation.