Inflation highest in Yolanda-hit Central Visayas, BSP report shows

THE Yolanda-stricken Central Visayas has been found to be experiencing the highest acceleration in consumer prices, necessitating the need for assistance and access to resources this year, the Bangko Sentral ng Pilipinas (BSP) said.

In a report published recently, the central bank said that inflation rate is highest among the poorer areas in the country, most particularly in Region 8.

“The inflation rate higher for the bottom 30 percent [of the income group] is true in almost all the regions, with Region 8 experiencing the highest inflation rate possibly due to the impact of Typhoon Haiyan [local code name Yolanda], which devastated farms and destroyed infrastructure causing a spike in transportation and logistics costs,” the central bank said.

The trend is likewise true with the lower-income group population in other regions, according to the central bank.

The central bank explained that the lower 30 percent of the income groups in the country are most affected by inflation, which is due to the fact that these lower-income individuals spend a larger bulk of their salaries to food prices.

In particular, food items comprise 50 percent of the total consumer price index in all income groups, or the average for the entire country. The bottom 30 percent of the income class, however, spend about 75 percent of their total salaries to food items, particularly rice,  which had the largest increase of prices in the last months.

“The steady increase in the inflation rates for the bottom 30 percent bears watching given that this income group is most economically sensitive and vulnerable to price increases,” the central bank said.

The central bank also said that the higher inflation in the country for the bottom 30 percent can potentially increase the incidence and severity of poverty in the short run.

The BSP also warned that high inflation in the poorer sectors of the economy could exact a toll on the country’s long-run development as lower-income households, in order to meet food requirements, reduce spending on health and education.

The BSP had vowed to “take special interest” in improving the government’s attention to supply side management, which could include improving the scheduling and monitoring of rice imports; tighter monitoring of retail prices; lowering logistics and shipping costs; and increasing agricultural productivity.

The country’s inflation has hit 4.9 percent in August this year, nearing the upper bound of the government’s target due to higher prices of food. The Philippine Statistics Authority will release the September inflation rate on Tuesday.

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