The National Economic and Development Authority (Neda) has warned that the proposed minimum wage increase and jeepney fare hikes would likely raise inflation by 1.4 percentage points.
In a briefing to the Cabinet on Tuesday night and televised on Wednesday, Socioeconomic Planning Secretary Karl Kendrick T. Chua said a jeepney fare hike will increase inflation by 0.4 percentage points while a wage hike will lead to a 1 percentage point increase in inflation.
Chua said these estimates took into consideration a P1.25 increase in jeepney fares to P10.25 from the current base fare of P9 and P39 increase in wages to a minimum wage of P576 in the National Capital Region (NCR) or Metro Manila.
“Sa krisis na nangyayari ngayon ay tumataas po ’yung mga presyo ng pangunahing bilihin. At kung hindi po natin babantayan ito, puwede po siyang mag-spiral. Ibig sabihin, hindi lamang ’yung presyo ng langis o ng gas ay tumataas. Puwede ring sumunod ang pagkain, puwede ring sumunod ’yung mga kuryente, tubig, at iba pa. [The current crisis is causing an increase in the price of basic goods. If we do not monitor this closely, this can spiral. This means, the price of other commodities, other than oil, could see an increase. It is possible that food prices will follow as well as electricity, water, and others],” Chua said.
If inflation will increase by 1.4 percentage points, Chua said, this means the projected inflation rate of the Bangko Sentral ng Pilipinas (BSP) of 3.7 percent will be higher at 5.1 percent. Chua said this would not only affect sectors such as transportation but all Filipinos.
This level of inflation will be the highest using the 2018-based Consumer Price Index. Under the current series that has been made available by the Philippine Statistics Authority (PSA), the highest inflation rate recorded was at 4.4 percent in August 2021.
“We should be concerned not only for one sector or one type of worker. Dapat po lahat po ay concern po natin. [We should be concerned for all sectors],” Chua said. “At dahil dito, dapat maingat po tayo. Marami po tayong gustong ma-achieve pero dapat alam po natin kung ano po ’yung mas nakakabuti sa ating kapwa Pilipino. [Because of this, we should be careful. We want to achieve many things but we have to know what would be the best for our fellow Filipinos].”
In a separate briefing on Wednesday, Asian Development Bank (ADB) Southeast Asia Department Senior Economist James P. Villafuerte said the projected impact would even be larger than Neda’s estimate.
The ADB Senior Economist said the rule of thumb when it comes to the impact of oil prices is that a 10 percent increase in pump prices would lead to a 0.4 percentage point increase in inflation.
Villafuerte said, however, that local fuel pump prices have already increased by 30 percent. Taking that into consideration, the total impact of the increase in oil prices in the country could already translate to a 1.2 percentage point increase in inflation.
“Of course this is a static analysis because there will be adjustment in terms of probably tax adjustment for oil. And then the second is some countries also provide subsidies to electricity, which will also temper the impact of oil. We are still doing the analysis in the ADO [Asian Development Outlook] and that analysis will come out on April 6,” Villafuerte said.
Based on the latest inflation data from PSA, inflation for Housing, Water, Electricity, Gas, and Other Fuels reached 4.8 percent in February, while inflation for transport has increased to 8.8 percent during the month.
The rise in the prices for these commodities was much higher in Areas Outside the NCR (AONCR) where Housing, Water, Electricity, Gas, and Other Fuels reached 5.2 percent, while transport inflation increased 8.9 percent in February.
In NCR, Housing, Water, Electricity, Gas, and Other Fuels reached 3.6 percent while transport increased to 7.9 percent in February.