HIGH PRICES With inflation rate going up to a high of 5.7 percent in five years, vendors at Paco Market in Manila expect prices of vegetables to rise. —MARIANNE BERMUDEZ
Higher food, fuel and transport costs pushed inflation nationwide to 5.7 percent last month, the fastest rise in over five years, the government said on Tuesday.
Surging inflation reduced a family’s purchasing power of P10,000 last year to only P9,430 last month.
In Metro Manila, prices of basic goods and services rose further to 6.5 percent, up from 5.8 percent in June and 2.9 percent in July last year.
Inflation in July nationwide marked the fifth straight month the rate has breached the central bank’s 2-4 percent target for this year and next, leading some analysts to believe policymakers would deliver a rate hike as much as 50 basis points on Thursday.
The inflation rate was near the top end of the central bank’s 5.1-5.8 percent estimate for July.
Amid rising consumer prices, the country’s economic managers assured the public that the government was moving to temper inflation. They said inflation would taper off toward the end of the year.
Food prices surge
In a report released on Tuesday, the Philippine Statistics Authority (PSA) attributed the increase in prices of basic goods and services to a 7.1-percent year-on-year increase in the price of food and nonalcoholic beverages.
Rice prices have further gone up amid low grain inventory and depleted buffer stock of the National Food Authority.
Declining rice inventory
“Part of the supply problem is the country’s declining rice stock inventory—caused by weather disturbances in the country and in other rice-producing countries like Thailand and Vietnam—which is taking a toll on the prices of rice,” Finance Secretary Carlos Dominguez III, Budget Secretary Benjamin Diokno and Socioeconomic Planning Secretary Ernesto Pernia said in a joint statement.
They said the 2.36 million metric tons of rice last month “declined by 8.2 percent year-on-year (from 2.57 million MT in July 2017 and dropping by 18.8 percent from the preceding month’s 2.91 million MT), with the National Food Authority’s rice buffer remaining almost depleted.”
Jeepney fare
Another driver of inflation is higher transport costs. Since July 9, minimum jeepney fare has been increased to P9 from P8 because of rising pump prices of fuel.
At the same time, the excise on cigarette further rose to P35 per pack starting July under the Tax Reform for Acceleration and Inclusion (TRAIN) Act, up from P32.50 in January and P30 last year.
The TRAIN law, which was implemented on Jan. 1, jacked up or imposed new excise on cigarettes, sugary drinks, oil products and vehicles, among other goods, to compensate for a higher tax-exempt personal income.
At the Senate finance committee hearing on the proposed P3.757-trillion national budget for 2019, Finance Secretary Dominguez said the TRAIN law contributed 0.5 percentage point to inflation.
Commodity groups
The PSA said the following commodity groups brought about the higher prices in Metro Manila:
• Alcoholic beverages and tobacco, up 21.9 percent year-on-year
• Transport, up 8.9 percent
• Housing, water, electricity, gas and other fuels, up 8.2 percent
• Food and nonalcoholic beverages, up 7.2 percent
• Health, up 4.5 percent
• Clothing and footwear, up 2.4 percent
• Recreation and culture, up 1.1 percent
• Communication, up 0.6 percent.
Income loss
In the wake of the price increases, workers saw their income go down by as much as P2,700 in the first six months.
Based on estimates of Ibon Foundation, roughly 60 million Filipinos suffered an income loss of around P993 to P2,715 because of the higher-than-expected inflation.
The research group noted that the peso’s continued depreciation, the rising price of oil on the global market and the implementation of the TRAIN law were among the factors that drove up inflation to 5.7 percent in July.
Wage hike
On Tuesday, labor groups lamented that Ibon’s estimate showed that the recent P9 to P56 increase in the minimum wage imposed by the Department of Labor and Employment was not enough to cover at least P165 that workers lost to inflation monthly.
Nagkaisa labor coalition spokesperson Rene Magtubo urged the government to fast-track its plan to flood the market with basic goods, such as rice, sugar, cooking oil at affordable prices to tame inflation.
The Federation of Free Workers urged the Department of Trade and Industry to be more proactive in monitoring businesses, which may take advantage of the situation. —With a report from the wires