The Philippine economy continued to grow in Q2, but momentum softened. GDP grew 2.3% YoY, with Services (+4.5%) and Agriculture (+2.7%) supporting growth, while Industry declined by 2.4%. The uneven performance highlights a consumer and service-led economy, where retail remains an important source of resilience.
Despite slower overall growth, retail remained relatively strong. Wholesale and Retail Trade grew 4.6%, ahead of the 2.8% growth in household consumption. This suggests that consumers are still spending, but not necessarily more freely. Instead, they appear to be making more deliberate choices about where, what, and how much they spend.
This cautious behavior becomes clearer when we look at prices. Inflation eased slightly to 6.2% in July, from 6.4% in June, but remains well above last year’s level. While price increases slowed in areas such as transport and restaurants, essential household costs—including housing, utilities, health, and furnishings—continued to rise.
So, while inflation is moving in the right direction, households are still dealing with a higher cost of living.
The labor market showed some improvement, with employment reaching 50.66 million in June and labor force participation increasing to 65.1%. However, unemployment edged up to 4.9%, while 6.11 million workers wanted additional hours or another job.
This suggests that having a job does not always mean having enough income to spend comfortably. For retail, this helps explain why consumers remain active but increasingly focused on value and affordability.
All things considered, the picture is one of resilience, but with caution. Consumers are still participating in the market, but elevated living costs and uneven income growth are making them more selective.
In the coming months, shoppers are likely to continue looking for better value, promotions, affordable alternatives, and products they consider worth the spend. For retailers, staying relevant will mean responding closely to these trade-offs through the right price, product mix, and value proposition.
Download the full report: https://web.tresorit.com/l/1mDkm#PNpUQUf7KX0ZALB5HfaW5A
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