Filipino households tighten budgets as inflation concerns persist

Filipino consumers remain optimistic about their financial prospects over the next year despite persistent inflationary pressures, with households becoming more disciplined in their spending, saving and borrowing habits, according to TransUnion's latest Consumer Pulse Study.

The Q2 2026 survey found that 74% of Filipinos expect their household income to increase over the next 12 months, matching the proportion who are optimistic about their overall financial outlook. Although this marks only a marginal improvement from a year earlier, it suggests confidence has remained resilient even as households contend with higher living costs.

Income growth has moderated compared with last year, with 38% of respondents reporting higher earnings over the previous three months, down from 41% in Q2 2025. However, 43% said their income was unchanged and only 19% reported a decline, indicating that most households have maintained financial stability.

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Even so, inflation continues to weigh heavily on consumer sentiment. Around 84% of respondents identified rising prices as one of the top three threats to their household finances over the next six months, ahead of concerns over job security (54%), recession (44%) and interest rates (44%). Affordability pressures are also evident, with 45% expecting they will be unable to fully pay at least one current bill or loan, up slightly from 44% a year ago.

"Filipino households are entering the second half of the year optimistic but clear-eyed. They expect their incomes to stay resilient, which keeps confidence broadly intact - yet they feel the weight of inflation on everyday costs, such as rice prices, and uncertainty over upcoming financial commitments amid broader global economic headwinds," said Weihan Sun, senior director of research and consulting for Asia Pacific at TransUnion.

The financial pressures are prompting consumers to adopt more cautious spending habits. More than half (55%) said they had reduced discretionary spending on areas such as dining out, travel and entertainment during the past three months, compared with 47% a year earlier.

At the same time, households are strengthening their financial buffers. Nearly half (49%) reported adding to emergency savings, up from 45% in Q2 2025, while only 8% said they had drawn from retirement savings, down from 12% a year earlier.

Despite the greater emphasis on saving, consumers are also making more use of credit to manage day-to-day finances. Seventeen per cent reported using available credit over the past three months, compared with 15% last year, while 51% expect their bill and loan repayments to increase over the next three months.

"Across these behaviours - from trimming discretionary spending to building savings while leaning on credit more selectively - what stands out is how intentional these choices are. Filipino households are not simply responding to pressure, but prioritising what matters and being deliberate with every peso, using credit with intention to smooth day-to-day cash flow and bridge spending gaps. This shift toward more active financial management is an encouraging sign of growing financial maturity," Sun added.

Demand for credit remains robust, with 58% of respondents describing access to credit and lending products as very or extremely important. Nearly half (48%) plan to apply for new credit or refinance existing facilities within the next year.

Among prospective borrowers, personal loans have become increasingly popular, with intended applications rising to 52% from 45% a year earlier. Planned credit card applications also increased to 35% from 31%, while mortgage demand declined to 12% from 17%.

However, the study suggests lenders may be losing potential customers during the application process. Six in 10 consumers who considered applying for credit ultimately abandoned their plans, up from 57% a year ago.

High borrowing costs were the most commonly cited reason, mentioned by 35% of respondents, followed by finding alternative funding sources (32%) and issues related to income or employment status (28%).

"More Filipinos are turning to credit for the flexibility it offers, especially in uncertain times. However, when six in ten of those who considered borrowing walk away from a credit application, the issue is more friction than intent. The opportunity for lenders is to make credit more inclusive, so responsible borrowers are not lost to cost, complexity or eligibility barriers, while consumers can play their part by maintaining healthy credit habits. That is how we turn credit access into lasting financial resilience," Sun said.

The findings are based on a survey of 961 Filipino adults conducted between 29 April and 19 May 2026, covering respondents from Gen Z through to Baby Boomers. The quarterly study tracks changes in consumer attitudes towards income, debt and financial wellbeing to provide insights for financial institutions and policymakers.

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