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Like
many of Manny Pacquiao’s opponents, ordinary Filipinos
are reeling against the ropes and just one solid punch
away from being knocked out because of the nonstop rise
in prices of food and other commodities. As prices
continue to soar, more and more people join the ranks of
the poor.
And
there’s no end in sight. In June, inflation hit a
14-year high of 11.4 percent, a huge jump from last
year’s 2.3 percent. It was the first double-digit rate
since January 1999. The latest inflation figure exceeded
the expectations of both the market and the Bangko
Sentral ng Pilipinas, so there’s really no telling when
Juan de la Cruz will get a respite from this severe
beating.
In the
world market, oil prices continue their relentless march
to record highs as it breached $147 a barrel on July 11.
Runaway oil prices affect many nations, but the
Philippines is one of the hardest hit because all of its
oil requirements are imported and we will always be at
the mercy (or cruelty) of oil producers and speculators.
The
weekly increase in local pump prices will likely persist
beyond August, and there’s a big chance that fuel prices
will reach P70 a liter before we start to hear Christmas
carols.
There’s
an old Filipino saying, “Kapag maiksi ang kumot,
matutong mamaluktot!” It will do us a lot of good if
we follow this timeless adage. One positive thing that
has come out of the escalating cost of commodities and
services is that many are now adhering to a more frugal
lifestyle, particularly in the use of fuel and energy.
The LRT
and MRT have suddenly become very popular, even to
managers and executives. Despite the congestion, car
owners are opting to use the passenger trains and rub
elbows with others who are trying to stretch their
hard-earned money to make ends meet.
In the
second quarter alone, the number of passengers using the
MRT increased by more than 11 percent, and is currently
operating over its capacity during rush hour. You can
even sleep without falling over because you’re packed
like sardines.
Thousands have also shunned their cars in favor of
buses, which can be cheaper by as much as 80 percent. If
you live in Dasmariñas, Cavite, which is 30 kilometers
away from Metro Manila, you only pay P120 to P150 both
ways if you take the bus going to Makati City and back.
This compares with about P500 if you drive a car. Ask
yourself if you are willing to pay P350 or more each day
to travel comfortably. (Driving a car is hardly
comfortable, it’s even stressful).
A
welcome side effect of the renewed popularity of mass
public transport is the slight decongestion of our roads
because of the lesser volume of private vehicles. The
Metropolitan Manila Development Authority (MMDA) is
adamant to accepting this reasoning and insists the
improved traffic situation is a result of the many
programs it has implemented. Maybe. But if you travel
along Aguinaldo Highway in Cavite (which is outside the
MMDA’s jurisdiction), the improved flow of traffic is
quite apparent, and this is largely due to fewer
vehicles on the road.
There’s
also a keen interest among car buyers to go for vehicles
with smaller engines that use less fuel. If you are
planning to buy a car, avoid the gas-guzzling SUVs,
unless you are extremely wealthy. You may look cool
driving a handsome SUV, but it will burn a hole in your
pocket. Personally, I won’t feel cool if I bleed a lot
of money every time I step on the gas.
Reducing
your fuel expenses not only saves you precious pesos,
but it can actually lead to a small reduction in prices,
as well. Oil companies admitted that the recent rollback
in the price of gasoline (not diesel) was due to slowing
demand. That’s the law of supply and demand at work.
Perhaps with more and more people leaving their cars at
home and taking public transportation, we will see more
reduction in prices. (But first, the government should
improve our mass transport system.)
For a
change, let’s try to get the law of supply and demand on
our side. If we reduce our consumption of food or go for
cheaper alternatives, we may, in theory, force
manufacturers of brand items to lower their prices. Once
consumers start rushing back to their preferred brands
because of reduced prices, manufactures of the cheaper
alternatives may lower their prices, in turn, which
hopefully will trigger a price war. Not likely, but I
can dream, can’t I?
We can
extend this principle of reduced consumption to
utilities and leisure activities. If we use less
electricity and limit our phone calls and texting,
service providers may consider reducing rates. (Although
in the Manila Electric Co.’s case, being a monopoly,
lowering rates because of lesser demand is highly
improbable).
True,
this is a very simplistic way of trying to force a
reduction in prices. There are many other factors to
consider, and there is a certain point where prices
cannot go any lower regardless of how small the demand
is. However, the main reason for reducing consumption is
not to lower prices but to lower your expenses and
ensure that you will have enough to cover your needs and
allow you to set aside a little for your savings.
You want
to stop the bleeding? Control your spending.
****
Alvin T. Tabañag is a registered financial planner and a
member of the RFP Institute and the Association of RFPs
in the Philippines. He is the founder and training
director of AdvantagePlus Consulting and creator of
www.PinoySmartSavers.com, a web site dedicated to
promoting a culture of savings among Filipinos through
practical financial education. Comments and questions
about the article and other queries maybe e-mailed to
alvintabz@yahoo.com. Join the 12th RFP Program
(September 27 to November 29, 2008). Visit
www.rfp-philippines.com or inquire at info@rfp-philippines.com/Tel.
634-2204. |
