Cash subsidies for poorest households urgent as inflation reaches 21-month high

January 5, 2021

by IBON Foundation

Research group IBON said that the higher December 2020 inflation figures underscore the urgency of giving poor and low-income families additional emergency cash subsidies. The group noted that the December 2020 inflation rate of 3.5% is the highest inflation in 21 months, and even higher for the poorest 30% of Filipino households at 4.3 percent. The faster increase in prices is all the more burdensome due to record joblessness and decreasing incomes amid the pandemic lockdown, the group said.

Philippine Statistics Authority (PSA) data show that the December inflation rate is the highest since March 2019. The prices of food and non-alcoholic beverages rose the fastest at 4.8% last month from 4.3% in November 2020. Inflation in health and transport was also higher at 2.6% and 8.3%, respectively.

The prices of pork, ampalaya, sitao, cabbage, carrots, habitchuelas, tomato, potato. and eggplant have risen substantially by anywhere from Php40 to Php120 per kilo in December 2020 from the same period last year.

Prices increased even faster for the bottom 30% income households nationwide with 4.3% inflation in December 2020 higher than the 3.6% rate in November 2020 and more than double the 1.9% in December 2019. The poorest households facing lost livelihoods, job losses and falling wages are in an even more difficult situation, IBON said. 

The government’s continuing failure to contain the pandemic has resulted in more unemployed Filipinos today than at any time in the country’s history. The group estimates unemployment in October 2020 at 5.8 million Filipinos — or two (2) million more than the official 3.8 million count — or an unemployment rate of 12.7 percent.

The National Capital Region’s Php537 minimum wage is the highest in the country. Its real value has fallen from Php448 in December 2019 to Php434 in December 2020. The Philippine Institute for Development Studies (PIDS) meanwhile estimates that, in a worst-case scenario of incomes contracting 20% without emergency cash subsidies, the 17.6 million Filipinos falling below the official poverty threshold of Php71 per person per day can rise to as much as 29.7 million.

With millions of Filipinos struggling through soaring prices, joblessness and meager incomes, IBON stressed the need for the Duterte administration to substantially increase emergency cash subsidies and also support for small businesses.

The group pointed out that a huge chunk of Bayanihan 2 funds for emergency cash assistance has apparently not even been spent yet. While Php6 billion has supposedly been allocated for some 1.2 million beneficiaries, only Php931 million has been disbursed to just 142,058 beneficiaries as of mid-December. Also, only 350,000 workers have been reported to get aid from the labor department as of the first week of December.

IBON said that the Bayanihan 2 cash assistance should be immediately distributed and a new cash subsidy program drawn up at least of the scale under Bayanihan 1. This will help millions of poor Filipino households at a time when their incomes and livelihoods are so uncertain, at the same time substantially boost aggregate demand and spur economic growth.###