“Last month’s inflation rate of 5.7 percent, the highest in more than five years, might have increased our poverty level from 23 percent of the population to 25 percent, or nearly three out of 10 Filipinos,” said Rep. Michael Romero of party-list group 1-Pacman, an economist.
Edd Gumban/File
‘2 million more Pinoys go poorer with inflation’
Jess Diaz (The Philippine Star) - August 12, 2018 - 12:00am

MANILA, Philippines — Higher inflation, or the increase in the prices of goods and services, could have made two million more Filipinos poor, lawmakers said yesterday.

“Last month’s inflation rate of 5.7 percent, the highest in more than five years, might have increased our poverty level from 23 percent of the population to 25 percent, or nearly three out of 10 Filipinos,” said Rep. Michael Romero of party-list group 1-Pacman, an economist.

He said the direct effects of inflation are “hunger, unemployment, higher interest and lesser savings for the middle class.”

Another resident economist in the House, Rep. Joey Salceda of Albay, said he expects President Duterte to take drastic measures to curb inflation.

“Just watch – they will reduce food tariffs to five percent. In effect, it matters little if we reduce it from 40 percent to five percent versus from 40 percent to zero for as long it increases supply and reduces the cost of importation,” he said.

Romero also explained the impact of price hikes on marginal households.

He said a six-percent average inflation “takes away P300 from a family whose members have a combined income of P5,000 a month.”

“That means that their P5,000 is down to P4,700 due to higher prices. They could make do with their reduced income by buying less food like rice and go hungry or hungrier. Or they could try to recover their inflation loss by earning more or going into borrowing,” he said.

If this household receives P200 a month from the government under the Tax Reform for Acceleration and Inclusion law, its net loss is cut to P100, he added.

Speaker Gloria Macapagal-Arroyo and her economic team have proposed scrapping import duties on certain products for six months to allow the private sector to bring in the needed supply that would force prices down.

Duterte’s economic managers and other Cabinet members are not against cutting tariffs but not to zero, which would effectively scrap these taxes.

Salceda, Arroyo’s focal person for counter-inflation measures, said reducing import duties to five percent “is less harsh to hear than the zero-tariff of our proposal.”

“A five-percent uniform tariff on food items will certainly have just the similar effect. These are times of difficulty for ordinary working families with fixed incomes and especially on the poor with less income generating capacity. Thus, quibbling over five or zero is less critical than bringing in the supply faster and soon. We can start another quarrel but what we need right now are lower prices and more supply in the market,” he said.

He said last month’s inflation of 5.7 percent was driven by a 7.1-percent increase in food prices.

“In June, the inflation for the lowest 30 percent of the population was 6.3 percent versus 5.2 percent overall. Since food is bigger in the consumption basket of the poor, it is safe to say that the inflation of the poor in July increased to a worrisome 7.4 percent. Inflation is second only to social injustice as the biggest the creator of poor,” he stressed.

Salceda said the counter-inflation measures proposed by the House were meant to “stop the (price increase) momentum, stamp out inflationary expectations, bring immediate price relief and make supply accessible, and bring inflation back down to the four-percent zone by year-end.”

He predicted that without “vigorous measures,” inflation could “hit six percent this month or beyond” from 5.7 percent last month.

INFLATION POVERTY
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