Filipinos cautious about spending

MORE FILIPINOS prefer to be cautious about spending their income this quarter amid high interest rates and elevated commodity prices, a study from TransUnion Philippines showed. 

Filipino households experienced different changes in income over the past three months, TransUnion’s Consumer Pulse Study for the fourth quarter showed.

“While nearly half (44%) of Filipino households reported an increase in income, 39% saw their income levels remain static,” it said.

The 44% of Filipinos who saw an increase in earnings was lower than the 48% reported in the same quarter in 2022. Meanwhile, the 39% who reported that their incomes remained unchanged was higher than 35% previously.

“Like the prior year, 17% of households experienced a decrease in income, reflecting a persistent segment of the population facing economic hardship,” TransUnion added.

About 20% of household incomes was affected by job losses, slightly higher than the 18% a year ago. Meanwhile, 23% dealt with reduced salaries or wages and 15% had less work hours. 

However, despite a challenging economic environment, the survey showed 21% of households had a member who started a new job.

About 23% of respondents also saw an increase in salaries or wages, while 24% of Filipinos indicated someone in their household started a new business.

“Filipino households adopted strategies that underscore their financial resilience in response to these economic pressures,” it said. 

More than half (51%) increased their savings for emergencies, while more than a third (34%) accelerated debt repayments.

“When faced with immediate financial challenges, the top strategies included paying what they can afford (46%), using savings (45%), and borrowing from friends or family (38%),” it said.

Most respondents (80%) also remained optimistic about their income growth in the next 12 months.

“Despite this optimism, there was an undercurrent of concern with 43% unsure about their abilities to meet all their bill and loan obligations — a sentiment unchanged from the previous year, indicative of an ongoing anxiety about financial liquidity among many Filipinos,” TransUnion said. 

“Looking ahead to spending plans over the next three months, the survey revealed a careful calibration of household budgets. While some foresaw increased spending on necessities like bills and loans (43%) and retail purchases (35%), there was a notable intention to curb spending on non-essential items (48%), big-ticket purchases (44%), and even digital services (21%),” it added.

Meanwhile, consumer interest for credit and other lending products went down to 58% from 64%.

Only 40% of respondents felt they have enough access to credit. This is lower than the 45% seen in the same period last year. Those planning to secure financing dropped as 50% intend to get new credit, down from 57% a year ago.

“About 52% favored personal loans over other types of credit. However, actual follow-through was low due to high borrowing costs,” TransUnion said. 

There was also a slight dip in confidence about credit scores rising with alternative data use, reflecting a gap in consumer credit knowledge.

“Understanding their credit health is crucial to help consumers stay on top of their creditworthiness and allows them to be ready for immediate financing needs amid economic uncertainties,” TransUnion Philippines President and Chief Executive Officer Pia Arellano said in a statement. 

“As a provider of global information solutions, we know that these findings indicate a need to intensify consumer education efforts across the financial system about how access to credit information can affect or benefit an individual’s financial health and enable them to make more informed financial decisions,” she said.

The study also showed that awareness and experience related to digital fraud was high among respondents, as 72% of Filipinos reported being targeted by fraudsters in the last three months even as most did not become victims. Phishing remained the top type of scheme.

“Concerns about sharing personal information online remained extremely high at 90%, driven by fears of identity theft and privacy invasion. Although concerns about unsolicited contact and government surveillance were less pronounced, they’re still noteworthy,” TransUnion said. 

The Consumer Pulse survey of 907 adults was conducted from Sept. 27 to Oct. 10 by TransUnion, in partnership with research provider Dynata. — Keisha B. Ta-asan