The purchasing power of Filipinos has been falling rapidly throughout the Marcos Jr administration and in December 2022 was even lower than in the same period the year before, said IBON. The government let inflation accelerate virtually throughout the year and gave only token relief to just a small portion of distressed families. The group said that this indicates scant concern for the poor’s deteriorating welfare.
The Philippine Statistics Authority (PSA) reported the headline inflation rate increasing to 8.1% in December 2022. This was higher than the 8% inflation rate in November and over two-and-a-half times the 3.1% inflation in December 2021. This brought average inflation for the year to 5.8% which is nearly twice the median of the government’s 2-4% target for the year.
By commodity group, the essentials saw among the highest average inflation rates for the year: food and non-alcoholic beverages (5.9%), transport (12.9%), and housing including utilities (6.4%). Price increases in basic goods and services weighed most heavily on poor and low-income families – especially the 18.6 million or seven out of ten households that did not have any savings as of the fourth quarter of the year, according to the Bangko Sentral ng Pilipinas (BSP).
The government has not undertaken any significant measures to address the supply shocks that are the underlying drivers of inflation. Instead, it relied mainly on the monetary measure of matching large rate hikes in the United States (US) – as if raising interest rates would increase domestic food supply or moderate global food and fuel price spikes that make production more expensive.
The internal character of the country’s problematic inflation is underscored by how the 8.1% December inflation rate is the worst in the major countries of Southeast Asia. The latest available inflation data for other countries according to their respective statistical agencies is: 4% (Malaysia, November); 3.5% (Brunei, October); 4.6% (Vietnam, December); 5.5% (Indonesia, December); 6.7% (Singapore, November); and 7.3% (Thailand, 3rd quarter).
The government has been scrimping on urgent relief measures. It promised to give the poorest half of Filipino families, or some 12.4 million families, Php3,000 in targeted cash transfers last year. However, the latest data IBON got from the Department of Social Welfare and Development (DSWD) and Department of Budget Management (DBM) indicates that just half of this already piddling amount has actually been given and even then to just 9.8 million beneficiary households. The hyped Kadiwa stores have reached even less and served just 1.2 million households.
IBON also estimated that December inflation has pushed the family living wage (FLW) for a family of five to an average of Php1,146 nationwide. The average daily nominal wage of Php404 nationwide is just one-third (35.3%) of the nationwide FLW. In the National Capital Region (NCR), the FLW for a family of five rose to Php1,145. The daily nominal wage in NCR is however not even half (49.8%) this.
Even if inflation moderates as expected this year, prices will still keep rising although not as fast as in 2022. Emergency cash assistance and substantial wage hikes remain critical for increasing household purchasing power, improving family welfare, and stimulating domestic economic demand for more rapid recovery. ###