THE Philippine economy could lose about P330 billion due to the fuel price crisis, according to initial estimates made by the National Economic and Development Authority (Neda).
In an ad hoc committee hearing at the House of Representatives (HOR) on Monday, Neda National Policy and Planning Staff Director Reynaldo Cancio said this represents a reduction of about 0.3 to 0.9 percentage points from the country’s GDP growth. He, however, stressed that this is “subject to discussions” and would have to be “vetted by other agencies.”
Neda Undersecretary for Policy and Planning Rosemarie G. Edillon also said in the same hearing that a fare hike could lead to a 0.3-percentage-point increase in inflation, should the government decide to implement a P1 increase in fares.
“If the fare hike snowballs into a wage hike, that will have a larger impact on inflation,” Edillon said in the vernacular.
To prevent this from happening, the Neda official said, the government may consider the provision of fuel subsidies and allow a minimal increase in fares.
The International Monetary Fund (IMF) said over the weekend that the crisis triggered by Russia’s invasion of Ukraine will likely hit the poor the hardest as they spend a larger share of their income on food and fuel.
Prices of oil and oil products have soared globally, including wheat and other grains. Ukraine and Russia are among the top sources of these commodities causing the surge in prices.
Wheat, fertilizers too
Ukraine remains one of the Philippines’s top sources of wheat, while Russia is the world’s leading exporter of fertilizer materials, prices of which in recent months have already been soaring.
In the Philippines, a CNN report quoted Unioil Petroleum Philippines as saying diesel prices may go up by P5.40 to P5.50 per liter and gasoline price may increase by P3.40 to P3.50 per liter from March 8 to 14.
In a Laging Handa briefing, Director Rino Abad of the Department of Energy’s (DOE) Oil Industry Management Bureau said Dubai crude oil prices have increased to $116.19 as of March 3.
The Philippine Statistics Authority (PSA) said food and non-alcoholic beverages account for 37.75 of the basket of goods in the 2018-based Consumer Price Index (CPI).
Housing, water, electricity, gas and other fuels had a weight of 21.38 while transport had a weight of 9.03 in the 2018-based CPI.
The assignment of weights is based on the expenditure data obtained from the 2018 Family Income and Expenditure Survey (FIES).
The weight, PSA said, is the proportion of the expenditure of a commodity or group of commodities to the total expenditure.
The weight of food in the basket of goods used for the computation of the inflation experienced by the poorest 30 percent, as previously explained by National Statistician Claire Dennis S. Mapa, is 70 percent against 39 percent for all the households.