THE spike in food prices hit poorest Filipinos the hardest as the increase in their spending for consumer products in August rose to its highest level in nearly 10 years, according to the Philippine Statistics Authority (PSA).
Based on data from the Consumer Price Index (CPI) for the Bottom 30 percent Income Households, the PSA said inflation for the poorest increased to 8 percent in August.
This was the highest since April 2009, when inflation reached 8.7 percent. In July inflation for the poorest was at 7.3 percent, higher than the average August inflation rate nationwide of 6.7 percent.
“What [the government] is doing now must be intensified,” Ateneo Center for Economic Research and Development (Acerd) Director Alvin P. Ang told the BusinessMirror. “[The government can start by making] food available and affordable [for example].”
This can be done, at least in the short term, by extending cash transfers, according to University of Asia and the Pacific School of Economics Dean Cid Terosa. But in the long run, the government must find a way to “stabilize economic growth.”
Terosa said this would entail increasing the quantity and quality of goods and services, especially those directed to the poor, that are provided by the government.
“[This high inflation] will raise the quantity of miserable individuals and families, as well as raise the intensity of misery,” Terosa told the BusinessMirror.
High prices
The poorest Filipinos are usually the ones who bear the brunt of high prices, especially when it comes to food. University of the Philippines School of Statistics Dean Dennis Mapa earlier said that the poorest Filipinos are very sensitive to food prices.
Mapa said this can be explained by the difference in inflation felt by all households and the inflation experienced by the bottom 30 percent, or the poorest Filipinos.
He explained that the weight of food in the basket of goods used for the computation of the inflation experienced by the poorest 30 percent is 70 percent against 39 percent for all the households.
“Relative to the annual growth rates in the previous month, higher annual
markups were also observed in the indices of all the food groups in August 2018, except for the index of corn, which registered a slower annual hike of 3 percent this month,” the PSA said.
The annual rate of the food index alone at the country level likewise picked up by 7.8 percent in August 2018. Its annual rate was pegged at 6.9 percent in the previous month and 3 percent during the same month in 2017.
Among the food items, those that posted the highest increases were fruits and vegetables, fish and rice at 14.1 percent, 11.3 percent and 7.3 percent, respectively.
The poorest Filipinos in Cagayan Valley, Western Visayas and Ilocos region experienced the highest increases in inflation rate at 11 percent, 10.1 percent and 9.3 percent, respectively.
In August, fruits and vegetables were the most expensive for Filipinos living in Cagayan Valley as average prices rose by 32.7 percent; Ilocos Region, 24.6 percent; and Calabarzon, 22.2 percent.
The poorest in Western Visayas paid more for fish as the average price rose by 20.3 percent; Central Visayas, 16 percent; and Mimaropa, 13.3 percent.
Data showed the poorest Filipinos living in Bicol experienced the highest inflation in rice at 10.5 percent, followed by Western Visayas at 10.3 percent and Mimaropa at 8.6 percent.
Poverty-reduction efforts
Earlier, local economists believe more expensive commodities could make it more difficult for the government to meet its target of reducing poverty to 14 percent by 2022, from the 21.6 percent recorded in 2015.
Mapa said urban and rural poor households, as well as near-poor households, are negatively affected because food inflation rates are high for Metro Manila at an eight- month average of 6.7 percent, and areas outside the National Capital Region with 5.9 percent. This is consistent with the findings of a 2008 study of Asian Development Bank (ADB) economist Hyun Son, which stated that a 10-percent increase in prices of food could lead to 2.3 million poor Filipinos, while the same increase in nonfood prices could lead to an addition of 1.7 million to poverty.
Son also said that a 10-percent increase in rice and fuel prices will result in an additional 0.66 million and 0.16 million poor people in the Philippines, respectively.
“The study was done by Hyun Son of ADB in 2008. I posted it so people can extrapolate on the impact of inflation on poverty. If the inflation rate cannot be curbed, expect an increase in the poverty rate this year,” Fernando T. Aldaba, dean of the School of Social Science at the Ateneo de Manila University, told the BusinessMirror.
Image credits: Alysa Salen