THE income of Filipino families increased over the last two years, but an economist noted that household spending grew at a much faster pace-potentially leaving families with less room to save.
On Wednesday, the Philippine Statistics Authority (PSA) reported that average family annual income grew by 16.5 percent to P411,350 in 2025 from P353,230 in 2023.
The PSA said family income increased across all income deciles. Higher-income households, particularly those in the seventh to 10th deciles, recorded faster income growth in 2023 to 2025 than in the previous two-year period.
Wages and salaries remained the primary source of family income, accounting for 54.6 percent of the total. This was followed by entrepreneurial activities at 15.5 percent, imputed rent at 8.7 percent, cash receipts from abroad at 8.5 percent, and cash receipts from domestic sources at 5.3 percent.
Other sources, including pensions, gifts, net receipts, dividends and shared income, accounted for the remaining 7.4 percent.
The increase in family income, however, came alongside a faster rise in household expenditure.
De La Salle University economist Ma. Ella C. Oplas said this could leave families with less capacity to save.
‘Spending is growing more than income. Worse is that given the need to spend, there is lesser capacity to save,’ Oplas told the BusinessMirror.
PSA data showed that average annual family expenditure rose by 24.7 percent to P321,850 in 2025 from P258,050 in 2023, faster than the 12.8-percent growth recorded between 2021 and 2023.
The increase in spending was recorded across all income deciles. In 2025, average annual expenditure ranged from P155,600 among families in the first decile to P693,810 among those in the 10th decile.
This is also reflected in household saving sentiment tracked by the Bangko Sentral ng Pilipinas (BSP). The share of households who said they would set aside savings remained below 35 percent throughout 2023 and 2024, before improving to 40.7 percent in the first quarter of 2025 and reaching 52.3 percent by the fourth quarter.
In 2023, the share ranged from 28.6 percent to 33.9 percent, while it was between 28.7 percent and 31.8 percent in 2024.
Oplas said the faster growth in spending relative to income pointed to pressure on household budgets, while inflation also affected purchasing power.
‘The gap suggests pressure on household budgets and may indicate that families are experiencing a squeeze in their purchasing power, which is the effect of inflation,’ she added.
According to the PSA, food and non-alcoholic beverages accounted for the largest share of household expenditure in 2025 at 33.3 percent.
This was followed by housing, water, electricity, gas and other fuels at 21.6 percent; restaurants and accommodation services at 7.0 percent; transport at 6.9 percent; personal care, miscellaneous goods and services at 4.2 percent; and health at 3.5 percent.
The spending figures came amid a period of easing inflation, with annual average inflation slowing to 3.2 percent in 2024 and further to 1.7 percent in 2025, from 6 percent in 2023.
Nominal vs. real
Oplas also pointed out that the Family Income and Expenditures Survey (FIES) figures are nominal, meaning they reflect the peso value of household income and expenditure without adjusting for changes in prices.
Looking at the figures in real terms, or after accounting for inflation, she said real family income growth may be only around 5 percent, while real expenditure grew by 12.2 percent.
While the gap between real income and expenditure growth remains substantial, Oplas said the growth rates themselves were relatively modest.
Oplas added that the weak growth in purchasing power could leave households with little income left after paying for basic needs.
‘So income is not enough to save, that’s why a lot of households are living from paycheck to paycheck,’ she added, partly in Filipino.