Metro Manila’s middle-class Gen Zs and Millennials have expressed growing concern over the impact of inflation during the second quarter of 2023, according to a survey conducted by the Nomura Research Institute (NRI) Singapore-Manila Branch. The poll, which was performed in May and June, found that an astounding 94% of participants experienced inflation during this time.
The rising costs of essential goods and services, such as food, transportation, fuel, and utilities, have forced these young adults to make cuts in their non-essential spending, including leisure and entertainment expenses. Among the respondents, 60% reported that the continuous price increases had the most significant impact on their food and beverage expenses, followed by transportation and fuel costs at 15%, and utilities, such as electricity, water, and internet bills, at 14%. In addition, 83% of participants claimed to have cut back on non-essential purchases, and 79% felt it necessary to do the same with entertainment and leisure costs.
The survey also highlighted the financial challenges faced by this demographic. Approximately one-third of respondents (32%) reported being unable to save over the past 6 to 12 months. 44% of those who were able to save a portion of their income did so at a lesser rate. 38% of respondents have changed their savings objectives by either lowering the target amount or delaying their timetables due to ongoing inflationary pressures. Similarly, 47% of participants had to modify their savings strategies.
To cope with the financial strain, a significant number of respondents have turned to loans. Of the surveyed individuals, 71% reported having outstanding loans. In an attempt to augment their incomes, 43% of respondents resorted to taking out additional loans in the past year. Among those who already had loans, 58% had to cut back on other expenses to meet their loan obligations, while 19% were forced to delay payments. The survey also revealed that 41% of respondents possessed credit cards. Personal loans were the most prevalent type of loan, accounting for 30% of respondents, followed by alternative instalment loans and salary loans, each representing 19% respectively.
Regarding investments, 52% of respondents had existing investment portfolios. Among these, mutual funds and stocks were the top investment products, chosen by 18% of participants each. However, due to the inflationary pressures, 12% of respondents had to partially liquidate their holdings for increased liquidity, and a minimal 1% sold off their entire investment portfolio.
Given the challenges posed by inflation, respondents have adopted a diverse array of coping strategies. A notable 94% expressed concerns that continuous price increases would persist over the next 6 to 12 months. Consequently, 91% of participants felt the need to explore additional income streams. To adjust to the current economic situation, 86% of respondents planned to continue cutting back on expenses, while 73% intended to reduce their spending on entertainment and leisure activities.
To better prepare for the future, 34% of the respondents said they planned to raise their savings allocations, while 33% wanted to keep up their existing savings pattern. However, because of increases in inflation, 16% of respondents planned to lower their monthly savings allocation.
The survey also shed light on borrowing habits, with 46% of respondents indicating that they were less likely to take out loans, while 28% stated they were more likely to acquire additional loans.
Regarding investments, 12% expressed a desire to explore risky investments in the hopes of achieving high returns over the next 6 to 12 months. Meanwhile, 40% were considering more conservative options. Notably, 30% stated that they would choose to avoid investing altogether, while 18% aimed to maintain liquidity.
The online survey conducted by the NRI Singapore-Manila Branch included 295 adults from Metro Manila, consisting of 92 Gen Zs and 203 Millennials from the middle class. The participants had monthly individual income ranges of PHP 13,000 to PHP 41,000 and PHP 41,001 to PHP 163,000.
As inflation continues to impact the daily lives and financial well-being of Metro Manila’s middle-class Gen Zs and Millennials, it is clear that they are actively seeking ways to navigate these challenges and secure their financial futures.