The truth about why living in the Philippines costs more than it should

[Lee]

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In Brgy. Cupang, Muntinlupa, Lorna starts her day preparing fermented paste for her siomai cart. She’ll begin selling at noon and will end her day at midnight. Rest is not an option If she wants her daughter and grandchild fed. Now in her late 40s, she’s been selling on the sidewalks since 2016.

In the past year, she had to raise her prices to account for the increase in the cost of ingredients. When asked what comes to mind when she hears the word “inflation,” she responds with questioning eyes. While a global phenomenon, inflation remains a vague concept for the most vulnerable.

Inflation is most visible in our everyday food consumption. This is illustrated by the Consumer Price Index (CPI), which measures drastic changes in the costs of goods over time.

Instead of measuring each item in the market, the CPI bundles products regularly bought together by the average consumer. Think of it as a basket of everything you need to survive daily. A year ago, your P1,000 could buy 3 kilos of pork and 2 cartons of milk. Now, P1,000 can only go as far as 2 kilos of pork and a single carton of milk. This signifies our decreasing purchasing power.

When the COVID-19 pandemic sent the world to a standstill, the economy didn’t function the way it was programmed. The government borrowed money and in turn, households received subsidies—a way to keep the money in rotation or, simply, the economy alive.

But to keep market prices stable, the number of goods available must always match what people want to buy. However, due to road closures and high fuel prices, businesses were unable to get the supplies they needed to produce the same amount of goods. Demand increased while the supply remained low, tipping the scale.

Soon enough, news of soaring inflation rates flooded the mainstream media. In December 2022, inflation peaked at 8.1%, the worst spike in over a decade. Supply-driven, as experts would say. Perhaps this was already expected in the midst of our recovering economy, but high costs trickling down to the average Filipino now meant putting in long hours of hard work without much return.

JC Punongbayan, an assistant professor at the University of the Philippines School of Economics, shares that in 2021, the government set the poverty threshold at P12,030 per month. “This is the average income needed to meet the minimum basic food and non-food essentials of a family of five. For that family size, this translates to a little over P77 per member per day.” He continues, “But what can that amount buy, really? This figure is not realistic, especially as inflation shot up in 2022 and early 2023 to 14-year highs.”

This threshold is crucial as it determines the eligibility of families for aid and monetary assistance. It's an amount indicative of how far our government will support households in the margins.

“There’s a need to account for other dimensions of poverty besides a focus on income. You may have an income higher than the poverty threshold, but you can still be poor if you don’t have access to education and health facilities. In other words, we need to have a ‘multidimensional’ take on poverty,” Punongbayan emphasizes.

Inflation further accentuates class inequality. For students fresh out of college, individuals looking to shift careers, or ordinary workers dreaming to unroot themselves from unlivable wages, hopes and dreams start to get blurry. As the Philippines emerged from a grueling two-year pandemic, it remains buried under massive debts: P13.91 trillion to be exact.

In Lorna’s household in Muntinlupa, even the modest indulgence of a weekly fruit salad became a rarity as prices of commodities skyrocketed. Erwin, a food delivery rider for 2 years now, says he tries to budget by using fewer appliances. While King, who’s been working in a lechon joint for 8 years, shares how his salary is no longer sufficient for their needs. His family, with a grade schooler and a PWD, skips breakfast to get by.

Filipinos, often lauded as madiskarte, have always been the ones to adjust. Punongbayan lists the ways we’ve learned to survive: “From buying tingi-tingi, taking multiple jobs, getting emergency payday loans, cutting back on luxuries, asking for remittances from relatives, and maximizing ayuda from the government.” These have become strategic coping mechanisms. “But these can only do so much.”

Punongbayan shares that the Bangko ng Sentral ng Pilipinas (BSP) took measures by raising policy rates—a big move from an economic standpoint. Despite this, food remains outside their scope. “BSP implored other government agencies, particularly the Department of Agriculture, to implement ‘non-monetary’ policies to temper food inflation. Unfortunately, over the past year, the government largely failed to control prices.”

Lowering inflation relies largely on government intervention. Punongbayan emphasizes the need to address long-term agricultural issues such as low productivity. There must be investment and financial support in place to ensure each sector is padded amid economic instability—something that should come easy, now that the president is our agriculture secretary.

 

 

The truth about why living in the Philippines costs more than it should (msn.com)

 

[BrettGC]

This is one of those "No sh%t, Sherlock" moments.  That's directed at the author of the linked article, not at Lee who shared the article. 

I guess the take away is that many Filipinos don't understand why their peso is not going as far.  I know from personal experience when I mention CPI, interest rates or something similar around here, many eyes glaze over.  Explaining WPI (Wage Price Index) not keeping up with CPI normally clears the waters though. 

https://www.focus-economics.com/country-indicator/philippines/inflation/#:~:text=Philippines%3A Inflation falls to over,inflation rate since May 2022. is stating that inflation has dropped to 7.2% annually.  

The NCR wage board recently increased minimum wages by about 7.5%.  

Region 7 (Central Visayas) handed down 7.6%

My observations of family member's incomes and local prices lead me to disagree with those numbers but there hasn't been much movement here; forget about it keeping up with inflation. Yes the decision has been handed down, but not acted upon yet. 

Funnily enough my step-daughter who works for a US based firm, received an 8.5% increase. 

 

[scott h]

In her 40's with supporting a daughter and granddaughter, no mention of a husband or son-in-law or the daughter working.....hmmmm, think that might have something to do with it?

[Lee]

35 minutes ago, scott h said:

In her 40's with supporting a daughter and granddaughter, no mention of a husband or son-in-law or the daughter working.....hmmmm, think that might have something to do with it?

Good points.

Also never to be spoken about to family members in a similar situation are monies wasted on B day parties for adults, Tuba Sunday drink fests , lottery tickets , etc.

[hk blues]

It's a relative problem IMHO - In the UK where inflation spiked at something like 10%+ and the interest rate on mortgages has tripled from 2% to 6% in a year the resultant impact has been households are having to cut back on discretionary spending whereas here the impact is that people have to go without some of the basics i.e. meals.

I totally get it that some, or even many, here are not willing (in some cases able) to work hard(er) to earn enough to get by but it's a different level of hardship many face here.  My son goes to a private school, not the best nor the worst in our city, and the last 2 Saturdays they played football against a local school - my wife explained that most of the kids were playing with broken shoes and the after-game feed was more than welcomed by the kids.  That's the reality for many, many people.

Meanwhile, the Priest in my son's school commutes around the country by helicopter.