Philippine household spending growth slowed to 1.9 percent in the second quarter of 2026 as surging inflation and borrowing costs forced consumers into survival mode.

The pullback in domestic consumption dragged first-half gross domestic product expansion down to 2.6 percent, marking the weakest growth rate for the country outside the pandemic period since 2009.

Data presented by Estella Dhiel B. Villamiel, head of institutional research at First Metro Securities Brokerage Corporation, showed that local buyers are cutting non-essential purchases to cope with escalating food and transport bills. Headline inflation reached 7.2 percent in September, pushing the year-to-date average to 5.4 percent, well above the central bank target range of 2.0 to 4.0 percent.

Shoppers are purchasing fewer items despite spending more cash at cash registers across the country. Capital formation dropped 9.2 percent year-on-year in the second quarter, reflecting a broad retreat by corporate investors and commercial project developers.

Higher interest rates are accelerating the consumer slowdown. Bangko Sentral ng Pilipinas lifted its reverse repurchase rate to 5.0 percent on August 27, raising the cost of vehicle financing, home mortgages, and personal revolving credit.

Traditional car sales dropped roughly 10 percent year-on-year by the end of August as buyers deferred big-ticket acquisitions. Credit card transactions reached record volumes, but non-performing credit card debt jumped 46.4 percent, indicating mounting cash-flow pressure on salaried workers.

The broader consumer downturn is eroding employment gains across retail and services. 9 percent a year earlier, with rolling 12-month net employment metrics recording a loss of 307,000 positions.

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