Filipino Consumers Brace for Economic Challenges Amid Rising Inflation

In the bustling markets of Manila, where vendors hawk everything from fresh produce to household goods, a quiet concern simmers beneath the surface of daily life. Filipino consumers, while optimistic about their income prospects for the coming year, are increasingly wary of the economic hazards that loom on the horizon. Inflation, job insecurity, and rising interest rates are casting long shadows over their financial stability, prompting many to turn to credit as a lifeline.

Optimism Tempered by Economic Realities

According to the latest Consumer Pulse Study by TransUnion, conducted between May 5 and May 23, 2025, with 943 adult Filipinos, 73 percent of respondents expect their household income to rise in the next 12 months. This optimism, however, is tempered by significant concerns. A notable 44 percent of those surveyed admitted they might struggle to pay their bills and loans in full, reflecting a pervasive unease about personal finances.

The study highlights inflation as the dominant worry, with 83 percent of respondents identifying it as a primary concern. Job security follows closely, troubling 59 percent of Filipinos, while 40 percent are apprehensive about the impact of rising interest rates. These figures paint a picture of a population caught between hope for a better future and the stark realities of an uncertain economy.

TransUnion, a global credit reporting agency, noted in its report, “While many expressed confidence toward their income prospects over the next year, their outlook is tempered by ongoing economic challenges such as inflation and job security.” The organization added that in response, “consumers are actively adjusting their spending habits and seeking access to credit as they work toward greater financial resilience.”

Inflation: A Persistent Burden

Inflation has long been a thorn in the side of Filipino households, eroding purchasing power and driving up the cost of essentials. From rice to utilities, the prices of everyday necessities have surged in recent years, leaving many families scrambling to make ends meet. For the average Filipino, a trip to the market—like those captured in images from Manila on January 26, 2022—often involves tough choices about what to buy and what to leave behind.

The Philippines, like many Southeast Asian nations, is particularly vulnerable to global price shocks. Fluctuations in oil prices, supply chain disruptions, and currency depreciation often translate into higher costs for imported goods, which form a significant portion of the country’s consumption basket. While the government has implemented measures such as subsidies and price controls on key commodities, these interventions have had mixed results, with many consumers still feeling the pinch.

Analysts suggest that the inflation rate, which has hovered above the central bank’s target range in recent quarters, may continue to challenge policymakers. If left unchecked, it could dampen consumer spending, a critical driver of the Philippine economy, which relies heavily on domestic consumption for growth. The question remains whether the government and the Bangko Sentral ng Pilipinas (BSP), the country’s central bank, can strike a balance between controlling inflation and fostering economic expansion.

Job Security and the Precarious Labor Market

Beyond inflation, job security remains a pressing issue for Filipinos. The labor market in the Philippines has historically been characterized by a high degree of informality, with many workers engaged in precarious, low-paying jobs without benefits or protections. The rise of the gig economy, while providing flexibility, has further eroded traditional notions of stable employment.

The TransUnion survey’s finding that 59 percent of respondents are concerned about job security reflects deeper structural challenges. Even as the economy recovers from the pandemic-induced downturn, sectors such as tourism, retail, and manufacturing—key employers for millions of Filipinos—face ongoing uncertainties. Global economic headwinds, including potential recessions in major markets like the United States and Europe, could further impact export-driven industries and remittances from overseas Filipino workers (OFWs), a vital source of income for many households.

For workers in Manila and beyond, the fear of unemployment or underemployment is compounded by the rising cost of living. Many are forced to take on additional jobs or rely on family support to bridge the gap. Others are turning to loans and credit cards, a trend that TransUnion identifies as a coping mechanism amid financial strain.

Interest Rates and the Cost of Borrowing

Adding to the economic pressures, 40 percent of survey respondents cited rising interest rates as a top concern. The BSP has been tightening monetary policy in response to inflationary pressures, raising benchmark rates to curb price increases. While this approach aims to stabilize the economy, it also increases the cost of borrowing for consumers and businesses alike.

For Filipino households already grappling with debt, higher interest rates translate into larger monthly repayments on loans and credit card balances. This is particularly burdensome for the 44 percent of respondents who anticipate difficulties in settling their financial obligations. Small business owners, many of whom rely on credit to keep operations running, are also feeling the squeeze, as tighter credit conditions limit their ability to invest and grow.

The challenge for the BSP is to manage inflation without triggering a broader economic slowdown. If rates rise too quickly, they risk stifling consumer spending and business activity. Conversely, if inflation remains unchecked, it could spiral into a more severe crisis, further eroding confidence in the economy. The central bank’s next moves will be closely watched by both policymakers and the public.

Shifting Consumer Behaviors

In the face of these challenges, Filipino consumers are adapting. Many are reevaluating their spending habits, prioritizing essentials over discretionary purchases. Budgeting has become a necessity rather than a choice, with families cutting back on dining out, entertainment, and non-essential goods. At the same time, there is a growing reliance on credit as a means of managing cash flow, whether through personal loans, credit cards, or informal lending networks.

TransUnion’s report underscores this shift, noting that consumers are “seeking access to credit” to navigate economic uncertainties. While this can provide temporary relief, it also raises concerns about over-indebtedness, particularly for those already struggling to meet existing obligations. Financial literacy and access to affordable credit options will be crucial in preventing a debt trap for vulnerable households.

Moreover, the rise of digital financial services offers both opportunities and risks. Mobile banking and e-wallets have made it easier for Filipinos to access credit and manage their finances, even in remote areas. However, without proper regulation and consumer education, these tools could lead to impulsive borrowing or exposure to predatory lending practices.

Government and Policy Responses

The Philippine government faces a delicate balancing act in addressing these consumer concerns. On one hand, it must tackle inflation through fiscal and monetary measures, ensuring that price stability is restored without sacrificing growth. On the other hand, it needs to bolster job creation and social safety nets to protect the most vulnerable segments of the population.

Recent initiatives, such as cash assistance programs and subsidies for low-income households, have provided some relief. However, critics argue that these measures are often short-term fixes that fail to address underlying structural issues, such as income inequality and labor market informality. Long-term solutions, including investments in education, infrastructure, and sustainable industries, are needed to build a more resilient economy.

At the same time, the government must navigate external pressures, from global commodity prices to geopolitical tensions, that could exacerbate domestic challenges. Trade policies, foreign investment, and regional cooperation will play a critical role in shaping the country’s economic trajectory in the coming years.

Looking Ahead: A Fragile Optimism

As Filipino consumers brace for the economic road ahead, their resilience and adaptability stand out. The optimism reflected in the TransUnion survey—73 percent expecting income growth—suggests a belief in better days, even if tempered by immediate concerns. Yet, the path forward is fraught with uncertainty. Inflation, job insecurity, and rising borrowing costs are not merely statistics; they are lived realities for millions of households across the archipelago.

For now, the markets of Manila continue to hum with activity, a testament to the enduring spirit of the Filipino people. But beneath the surface, questions linger: Will the government and central bank find the right policy mix to stabilize the economy? Can consumers maintain their fragile confidence in the face of mounting pressures? As 2025 unfolds, the answers to these questions will shape not just individual livelihoods, but the broader trajectory of the Philippine economy.