Latest inflation figures are within the Marcos administration’s 2-4% target for 2024, but this doesn’t automatically translate into better living conditions for Filipinos whose real incomes are stagnating or falling, research group IBON said. The year ended with the prices of food and basic needs still beyond ordinary Filipinos’ meager means and substantial government intervention is still needed to improve the welfare of the low-income majority.

The Philippine Statistics Authority (PSA) reported an uptick in the inflation rate from 2.5% in November 2024 to 2.9% in December 2024. The uptrend, mainly caused by faster price hikes in house rentals and transportation, which the PSA claimed to be seasonal, is also lower than the 3.9% in  December 2023.

Annual inflation for 2024 is at 3.2% which is lower than the 6% inflation rate in 2023. Lower inflation in food and non-alcoholic beverages and housing, water, electricity, gas and other fuels is behind this downtrend. This was reportedly driven primarily by rice inflation which fell from 7.9% in 2023 to 4.4% in 2024.

The National Economic and Development Authority (NEDA) touted this as a success of government’s combined efforts to temper inflation. IBON however said that the government repeatedly ignores the fact that incessant price increases disproportionately burden poor and low-income Filipino households. They face further pressure on their purchasing power in 2025 from cuts in the government’s social protection budget and higher social security contributions.

As it is, high food and utility prices still challenged households at yearend. The PSA’s price monitor showed that food was still expensive in December 2024. In the National Capital Region: rice cost Php52-Php61 per kilo; the price per kilo of carrots, baguio beans, eggplants, ampalaya, native pechay and kangkong, galunggong, chicken, pork, and beef increased by Php5 to as much as Php115. The price of tomatoes particularly stood out and soared by Php149 from Php65 per kilo in December 2023 to Php213 per kilo in December 2024.

For typical households consuming 200 kilowatts per hour, the Meralco rate in December 2024 was raised from Php11.86 per kilowatt hour (/kwh) to Php11.96/kwh. This means consumers are paying an additional Php21 in their monthly electricity bill. Some urban poor communities in Metro Manila lament that their electricity rates are almost double or more, ranging from Php20-Php40/kwh.

The same is true for water consumers: Manila Water and Maynilad rates increased to Php42.26 and Php47.57 per cubic meter, respectively, in 2024. For some urban poor communities, water costs ranged from Php80-Php140 per cubic meter.

Low wages aren’t keeping up with rising prices. Despite wage hikes that took effect over the holidays – such as in the Cordillera Administrative Region, MIMAROPA, Eastern Visayas and Zamboanga which saw increases ranging from Php15-Php40 – the nominal minimum wage remains far below the family living wage (FLW). Across all regions, the average nominal wage of Php465 still falls Php759 short of the Php1,224 average FLW for a family of five.

Meager incomes and high prices are pushing many households into poverty and hunger. The Social Weather Station’s latest survey revealed 59% or 16.3 million families rating themselves as poor, and hungry families increasing to 6.3 million, as of September 2024.

IBON said that lower inflation is welcome but not enough to improve the conditions of most Filipinos. The Marcos Jr administration should increase Filipinos’ capacity to cope with rising prices through substantial wage hikes and sufficient assistance to vulnerable sectors. The government can also lower prices immediately by removing regressive value- added and excise taxes on goods and services.

In the long run, the country can moderate price inflation by improving domestic production of goods and services. Taking a broader view, the economy has to be transformed to create gainful jobs with decent wages and ensure equitable growth. Expansionary fiscal policies are also needed to improve public services and expand social protection. This can be funded with a more progressive tax system, including a billionaire wealth tax and higher income taxes for the rich and large corporations.