Oil shock now threatens consumer demand, Philippine firms warned

Insider Spotlight

• Reyes Tacandong & Co. warned that rising oil prices are becoming a demand threat, not just a margin issue for Philippine businesses.
• The advisory firm said companies risk overlooking weakening consumer spending while focusing only on fuel and logistics costs.
• Consumer-facing industries such as retail, food, transport, and hospitality are seen as most exposed to a “double pressure” of higher costs and softer demand.
• The firm urged businesses to stress-test liquidity, monitor customer behavior shifts, and improve operational flexibility before financial results deteriorate.

Philippine companies should prepare for weakening customer demand as rising fuel prices ripple across the economy, according to advisory firm Reyes Tacandong & Co. (RT&Co.).

In a commentary published on Thursday, May 28, 2026, the Makati-based professional services firm said many businesses remain too focused on the direct impact of higher fuel and logistics costs while underestimating the risk of softer consumer spending.

“The more important question for boards and leadership teams is whether the business is exposed not only to higher costs, but also to weakening demand,” RT&Co. said.

The firm noted that the Philippines’ consumption-driven economy makes local companies particularly vulnerable when households begin cutting discretionary spending to prioritize essentials such as food, transport, and energy.

Why it matters

RT&Co. warned that businesses may miss early signs of demand deterioration because financial reports typically lag behind actual consumer behavior.

The advisory firm said customers often adjust gradually by reducing purchase frequency, shrinking basket sizes, or trading down to cheaper alternatives before topline revenue weakens materially.

Industries considered most vulnerable include food and beverage operators, transport and logistics firms, manufacturers, hospitality businesses, and consumer services companies.

“Cost inflation is visible today; demand softening is often not,” the firm said.  

Between the lines

RT&Co. advised companies to move beyond traditional cost management and focus on resilience planning.

Recommended measures include stress-testing profit-and-loss scenarios, tightening pricing governance, monitoring transaction sizes and collections behavior, and reviewing working-capital exposure.

The firm also emphasized liquidity management, warning that companies in downturns often fail due to cash flow constraints rather than profitability alone.

“In business, the equivalent is liquidity: in a downturn, companies often do not fail first on profit — they fail on oxygen,” RT&Co. said.

RT&Co. is the Philippine member firm of the RSM global network and provides advisory, audit, tax, and digital transformation services nationwide.

— Edited by Daxim L. Lucas