THE crisis in Ukraine will likely hit the poor the hardest as they spend a larger share of their income on food and fuel, according to the International Monetary Fund (IMF).
The IMF said the Ukraine crisis is bound to cause price shocks that will be felt worldwide. The Washington-based lender said should the hostilities escalate, the world’s poor will be the ones to bear the economic costs.
“Countries that have very close economic links with Ukraine and Russia are at particular risk of scarcity and supply disruptions and are most affected by the increasing inflows of refugees,” IMF said.
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.
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.
“Price shocks will have an impact worldwide, especially on poor households for whom food and fuel are a higher proportion of expenses. Should the conflict escalate, the economic damage would be all the more devastating,” IMF said.
“The sanctions on Russia will also have a substantial impact on the global economy and financial markets, with significant spillovers to other countries,” it added.
Whammy at the pumps
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, Department of Energy’s (DOE) Oil Industry Management Bureau Director Rino Abad said Dubai crude oil prices have increased to $116.19 as of March 3.
The National Economic and Development Authority (Neda) earlier said due to these developments, they will discuss the impact of the Ukraine crisis with the Bangko Sentral ng Pilipinas and with the Department of Finance on Monday.
“Magkakaroon nga po ng pag-uusap ang economic managers. Nito pong nakaraang linggo, iyon po ‘yung masusi naming monitoring and then analysis and then estimation at saka iyong pagbubuo-buo nga po ng mga programa na puwede nating isaalang at Lunes po, mag-uusap-usap po iyong economic managers,” Neda Undersecretary Rosemarie G. Edillon said.
[The economic managers will discuss these. Our close monitoring of the past week, and analysis and estimation, as well as the programs that can be crafted in response, those will be tackled by the economic managers].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.
“The weight is a value attached to a commodity or group of commodities to indicate the relative importance of the commodities or groups of commodities in the market basket,” the PSA explained.
Image credits: Nonie Reyes