High prices, flat real wages remain despite lower inflation – IBON

February 5, 2019

by IBON Foundation

Research group IBON said that the lower inflation figure for January 2019 is welcome, but stressed that prices are still higher compared to last year. Real wages have been stagnant for more than a decade and high prices remain a burden for most Filipino families, said the group.

Headline inflation for January 2019 is at 4.4% according to the Philippine Statistics Authority (PSA). Price hikes have notably slowed down from 5.1% in December 2018, but inflation is still higher than the 3.4% inflation in January last year.

IBON observed that the prices of many basic goods are still higher than a year ago. PSA reports that in the National Capital Region (NCR), for example, the prices of rice, sugar and native garlic are more expensive by as much as Php3.00, Php10.00 and Php20.00 per kilo, respectively; vegetables like cabbage and eggplant increased by Php10.00 and Php40.00 per kilo; while bangus and beef have also increased by Php40.00 and Php25.00 per kilo.

IBON said that high prices continue to pose difficulties for the majority of Filipino families who are low-income earners. The group estimates that at least 6 out of 10 Filipino households struggle below the family living wage (FLW) of Php996 per day or the amount needed by a family of five members to live decently.

The group noted that, adjusted for inflation, the reported average daily basic pay (ADBP) of wage and salary workers of Php364 in January 2018 was only 1.6% higher than the ADBP 17 years ago. Yet wage increases in 2018 were not even able to compensate for high inflation so real incomes remain low and insufficient for decent living, the group underscored.  For instance, the Php25 wage hike in the National Capital Region (NCR) was just a 4.9% increase in the minimum wage, to Php537, versus 5.5% inflation in NCR for 2018.

High prices and stagnant wages will keep on hounding tens of millions of Filipinos unless the government radically changes its overly market-biased and profit-oriented economic policies, IBON said. The government has to accept the necessity of market-bending interventions to support domestic agriculture and industry if it wants to lower the price of locally-produced food and other products. The oil industry has to be regulated responsibly to lessen the effects of high global oil prices. Regressive consumption taxes that make basic goods and services expensive have to be cut, while workers’ wages have to be substantially increased. ###