'Resilient spending' still seen among Filipinos despite high prices – economist

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Metro Manila (CNN Philippines, August 25) — Filipinos are still expected to spend moolah in the coming holiday season despite the high prices of goods in the market, an economist said Friday.

China Bank Chief Economist Domini Velasquez said the inflation will only deter consumer spending "a little bit."

"Historically, we've seen resilient consumer spending," she told CNN Philippines' The Exchange.

"So, we were looking at other periods of high inflation rates, for example, when we had VAT in 2004 and when we had TRAIN (Law) in 2018," Velasquez explained.

"So, if you look at 2005 and 2019, consumer spending was still quite robust," she added. "So normally, consumer spending amongst Filipinos is very, very resilient."

The country's inflation rate maintained a downward trend for the sixth straight month in July at 4.7%.

But even with a salary increase, Steven Cua, president of Philippine Amalgamated Supermarkets Association, said workers would still need to keep a budget amid the high prices of consumer goods.

"With the increase in salaries for the wage earners, it can only help them or benefit them if they don't change their lifestyles," he said.

"But if they increased their lifestyles, stepped up a bit, mauubos din yung increase in salaries (nothing will be left out of their salary increases)," he also said.

On the other hand, the interest rate, which is currently benchmarked at 6.25%, will not also likely dampen holiday spending by the Filipinos, according to Velasquez.

"Not so much in terms of consumption, but for businesses this is really taking a toll," she said. "Consumption of households is still very much robust, especially credit cards, salary loans."