The July inflation rate of 4.7% shows slower price increases but the cost of basic goods such as rice, vegetables, fish and oil continues to rise and burden millions of poor consumers, research group IBON said. This will continue with the oil price, train fare and other hikes in August. The government needs to take more active measures to increase the purchasing power of poor, low income and middle-class households, said the group.
The Philippine Statistics Authority (PSA) reported lower inflation with slower year-on-year increases especially in food, utilities and transport. IBON noted however that many food prices continued to increase: well-milled rice is up from an average of Php43.90 per kilo in July last year to Php45.50 in July 2023; potatoes (from Php93.20 to Php125) and carrots (from Php90.40 to Php133.80); vegetables such as cabbage (from Php78.20 to Php97.40) and tomato (from Php65.70 to Php78); bangus (from Php203.10 to Php207.90) and galunggong (from Php197.50 to Php200.20); and fresh eggs per piece from Php7.50 to Php8.40. Gasoline prices have increased by Php8.90 per liter since the start of the year according to the energy department.
IBON stressed that rising prices make it more difficult for poor, low-income and even middle-class families to make ends meet. Almost 22 million or some eight-of-ten (78%) of families are poor or borderline poor as of June 2023 according to the Social Weather Station; and nearly 19 million or 70% of households do not have any savings as of the second quarter of 2023 according to Bangko Sentral ng Pilipinas (BSP) data.
The group also explained that nearly half (45%) of total employment is merely self-employment or outright informal, low-paying and insecure work. Using interest rates to restrain aggregate demand may just choke economic activity and further worsen informality and joblessness.
Wages meanwhile remain depressed and far below the family living wage (FLW) across the regions. Despite the recent wage hike in the National Capital Region, said IBON, the nominal minimum wage of Php610 still falls short of the Php1,165 FLW for a family of five as of July 2023 with a wage gap of nearly 48% or Php555.
The Marcos Jr administration is not taking any steps to increase the purchasing power of Filipinos such as through substantial wage hikes or further cash assistance for low-income households and small producers and businesses, IBON said. The government also keeps prioritizing food imports instead of improving domestic production and making local food products cheaper. As it is, palay and corn production has grown by an average of just -0.15% and 0.35%, respectively, from 2017-2022.
IBON said that Philippine inflation still being the highest in Southeast Asia highlights the administration’s inaction in abetting inflation. The latest available data shows inflation is lower in Singapore at 4.5 percent, Thailand at 3.9 percent, Indonesia at 3.5 percent, Malaysia at 2.4 percent, Vietnam at 2.1 percent and Brunei at 0.8 percent.
IBON said that recent big-time increases in the prices of petroleum products and train fares will further burden millions of consumers with little incomes and no savings. Prices have been hiked for kerosene (by Php3.25 per liter), diesel (by Php3.50), gasoline (by Php2.10) and LPG (Php4.55 per kilo). Light Rail Transit (LRT) trains 1 and 2 also implemented fare hikes for the basic fare by Php2.29 from Php11 to Php13.29, and for every additional kilometer by Php0.21 from Php1 to Php1.21. The Metro Rail Transit (MRT) will be implementing the same increase upon petition approval.