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June 15, 2008

Consumers pessimistic on spending

Filipinos are more pessimistic about spending in the next 12 months largely due to higher prices for oil and rice, according to a quarterly consumer confidence survey by the Philippine central bank.

Consumer confidence for the next 12 months, measured in the second quarter, turned negative for the first time in at least six quarters largely due to expectations of higher cost of goods and services, household expenses and lower income, reported Reuters, quoting the central bank survey.

Consumer confidence about the current situation also dipped to its lowest in at least six quarters at -43.8 percent in the April to June 2008 period, the survey said.

Weaker consumer spending has already put the brakes on economic growth, which cooled to a seasonally adjusted 0.8 percent in the first quarter, below expectations and sharply down from the previous quarter's 1.3 percent growth.

The central bank has warned that annual inflation could peak at around 10-11 percent this year after hitting a 9-year high of 9.6 percent in May due to record jumps in the price of fuel and rice, the country's national staple.

Faced with inflationary pressures, the central bank shrugged off growth concerns and raised its key overnight rates by 25 basis points last week, the first hike in nearly three years.

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