Rising inflation driven by global oil price volatility is expected to weaken household purchasing power and slow domestic consumption growth in the Philippines this year, according to BMI, a unit of Fitch Solutions.
In its April 20 outlook, BMI maintained a cautious but still positive view of local consumer spending, projecting real household consumption growth to ease to 4.5 percent in 2026 from 4.7 percent in the previous year.
Despite the slowdown, household spending is still expected to climb to Php 4.1 trillion (at 2010 prices) in 2026, or about 26.2-percent higher than pre-pandemic levels in 2019.
The report pointed to persistent headwinds, including elevated inflation, high household debt, and rising debt servicing costs. Inflation accelerated to 4.1 percent in March 2026, largely driven by spikes in global oil prices.
While a relatively tight labor market continues to provide some cushion for consumers, BMI said monetary policy is likely to remain steady in the near term. It expects the Bangko Sentral ng Pilipinas (BSP) to hold its benchmark rate at 4.25 percent in its April 23 meeting, as policymakers adopt a wait-and-see stance amid supply-driven price pressures.
The report underscores a fragile balance in the country’s consumption outlook, where resilient spending continues, but under growing strain from external cost pressures.