THE poorest 30 percent of the population will bear the brunt of higher fares which will lead to higher commodity prices, according to local economists.
University of Asia and the Pacific School of Economics Dean Cid Terosa estimated that the P1 increase in fares will have a direct and indirect impact on inflation of 0.73 percentage points.
Terosa said the direct impact of higher jeepney fares on inflation amounts to 0.45 percentage points.
“Affected most will be food manufacturing, wholesale and retail trade, accommodation, and food-service activities,” Terosa said.
“Clearly, the bottom 30 [percent will be affected the most] because they mostly commute and food is a big chunk of their budget,” he added.
Ateneo Center for Economic Research and Development Director Alvin P. Ang said the fare hike of P1 is already 12 percent of the original P8 jeepney fare.
Ang said the increase may have been necessary since the Pantawid Pasada assistance from the government to help public-utility vehicle drivers from the effects of the Tax Reform for Acceleration and Inclusion (TRAIN) law has not been given out.
Socioeconomic Planning Secretary Ernesto M. Pernia earlier said the Department of Transportation, however, is committed to begin implementing Pantawid Pasada this month.
Nonetheless, Ang said all commuters will be affected by the fare increase. Local economist Calixto V. Chikiamco said this means not only the poor will be affected.
“Not just the bottom 30 [will be affected] as the middle class commuting public will suffer,” Chikiamco said.
He added that in order to address the impact of rising prices, the government should immediately liberalize rice importation.
Pernia earlier said the move to set a rice tariff will reduce the retail price of rice by as much as P4 to P7 per kilo. As such, he said this will increase the purchasing power of low-income households.
‘Cash transfers to fill gap’
Action for Economic Reform Coordinator Filomeno Sta. Ana III said, while they do not have an estimate of how much the P1 hike will impact inflation, any increase in price can be addressed by cash transfers like the Pantawid Pasada given to jeepney drivers.
As of press time, the National Economic and Development Authority has yet to come up with its assessment of how much the fare hike will impact inflation.
“The amount of the unconditional cash transfer is more than enough to compensate for impact not only of transport fare but all other effects of TRAIN 1,” Sta. Ana said.
The Philippine Statistics Authority said the country’s year-on-year inflation for the bottom 30-percent income households went up by 5.3 percent in the first quarter of 2018.
This was higher than the 3.4-percent annual growth in the fourth quarter of 2017 and 2.8 percent in the first quarter of the previous year.
Inflation in June increased to 5.2 percent, from 4.6 percent in the same period in 2017.
The increase was primarily brought about by higher annual rates posted in the heavily weighted food and nonalcoholic beverages index at 6.1 percent.
Image credits: Alysa Salen