The government’s decision to raise oil and electricity prices has taken a toll on consumer confidence, with many planning to cut securities investments and purchases of homes and durable goods, in the expectation that the economy and the job market will deteriorate, a survey by Cathay Financial Holdings Co (國泰金控) showed yesterday.
Public sentiment about the economic outlook turned negative this month, reversing four months of good news, with nearly 50 percent of respondents indicating that they felt the economic situation could worsen over the next six months, according to the monthly poll.
The survey, which polled 16,501 people online between April 1 and April 7, came after the government raised oil prices by more than 10 percent early this month and announced plans to increase the price of electricity in all sectors next month.
Only 23.8 percent of respondents were upbeat about improved economic fundamentals ahead, while 22.4 percent were neutral, the survey found.
“Higher energy costs and unfavorable taxation surely weakened consumer confidence, although by how much remains to be seen,” Achilles Chen (陳欽奇), an assistant manager at Cathay Financial, said by telephone.
In addition, 44.6 percent of respondents said they expected job hunting to become more difficult going forward, compared with 12 percent and 35 percent who expressed optimistic and neutral views respectively, the survey showed.
As many as 94 percent of respondents expected consumer prices to go up over the next six months, as producers and retailers pass higher costs onto customers, the survey said.
A total of 63.1 percent of respondents expected their wages to remain unchanged and 24.4 percent said salaries could even go down, while 12.5 percent were optimistic about a pay raise, the survey said.
Consequently, 38.6 percent of respondents voiced plans to trim big-item purchases, outpacing those who were interested in buying at 20.5 percent, the survey showed, with 40.9 percent indicating their spending plans had not changed.
Meanwhile, the government’s plan to tax capital gains on -securities investments dampened investors’ appetite for risk as 34 percent of respondents said they would reduce their holdings, compared with 17 percent who said they would consider expanding their portfolio, the survey said.
The shrinking turnover on the local bourse reflected weaking sentiment, with foreign institutional players selling a net US$670 million (NT$19.77 billion) in local shares last week, Chen said.
Heightened inflationary pressures made it a bad time for property transactions, with 70.4 of respondent saying “now” was a bad timing to buy a house, while 53.6 percent said that it was a bad time to sell house.
“The findings may depress home transactions in the near future,” Chen said, in contrast to the view expressed by property brokers that the market could benefit from rising oil and electricity prices as investors allocate more funds to real estate as a way of hedging against inflation.
However, a growing number of people are positive about house prices in the future, as nearly 37 percent expect prices to go up, compared with 10 percent with the opposite view, the survey said.
A majority, or 53.3 percent of respondents, expect house prices to remain unchanged over the next six months as they did over the past six months, the survey showed.