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Opinion

Prices

VIRTUAL REALITY - Tony Lopez - The Philippine Star

To most Filipinos, their No. 1 problem is prices – high prices. Of nearly everything. The rate of increase in prices is inflation. Most people don’t understand what inflation means. But they know when prices are high, or are exceedingly high.

High prices make basic goods and services beyond the reach of ordinary people.

“Inflation is the single issue identified as urgent by most adults in the country,” says Pulse Asia, a respected pollster. In its December survey of 1,200 respondents, 72 percent cited inflation as concern No. 1, down slightly from 74 percent in September 2023. Three of every four Filipinos – between 72 and 74 of every 100 – cite inflation, or controlling it, as their most urgent concern.

Inflation is the only issue Filipinos hold against their President.  Despite the high prices, people still love Ferdinand Romualdez Marcos Jr.

BBM’s approval rating is up slightly, at 68 percent, in December, from 65 percent in September 2023. Presidential approval is higher across all income classes: ABC – 63 percent, from 53, up 10 percentage points; D – 69 from 68 and E, 68 percent from 53, up 15 points, the highest gain among all income classes.

So if he could just bring down rice to his promised P20 per kilo, BBM could be the most popular Philippine president ever.

Per Pulse Asia, the next most urgent national concerns are so distant, you won’t think they are concerns at all. Like increasing pay of workers, 40 percent in the December 2023 Pulse Asia survey (from 49 percent in September 2023); creating jobs 28 percent and reducing poverty, 25 percent.

Inflation is the urgent issue identified by the great of majority of Filipinos. All the others – wages, jobs and poverty – were identified by just a minority (less than half of the respondents).

In effect, people are saying, “Hindi baleng mababa sahod ko, o walang bagong trabaho o mahirap ako, huwag mo lang taasan presyo ng mga bilihin (I don’t care if you don’t raise my pay, nor are jobs being created, or if I remain poor, but please, don’t increase prices).” That’s how desperate people are about high prices.

Per Pulse Asia, BBM’s administration enjoys majority approval ratings for its handling of these issues – protecting the welfare of overseas Filipino workers (78 percent), helping calamity-hit areas (76 percent), protecting the environment (62 percent), promoting peace (61 percent), defending national territorial integrity (61 percent), fighting criminality (56 percent) and enforcing the rule of law (51 percent). In contrast, the national administration posts its only majority disapproval rating (73 percent) on the issue of controlling inflation, the single issue identified as urgent by most adults in the country (72 percent).

Inflation steals people’s money. If rice is P40 per kilo today and next month it goes up to P50, that’s a P10 increase or a 25 percent inflation. The average household spends P15 for every P100 of expenditures on rice alone. Rice is the single biggest expense item. If the P15 per kilo of rice goes up by 25 percent or to P18.75, a housewife will have to cut back on other expenditures in her P100 budget. That includes electricity, transportation, food outside, clothing and even necessities like tuition money.

Conversely, if the inflation rate slows down, by say 25 percent (it rarely happens), dear housewife gains P25 for every P100 of purchasing power. She can then spend the extra money on better food, a movie, a piece of underwear or park it under her pillow or in her favorite bank. Or even buy a bracelet of plastic pearls at Greenhills or Market, Market at BGC. A decline in inflation (it happens, ask BSP) is actually like having a pay increase or getting an extra job.

If inflation is high, banks increase the interest rates, which is the price of their loans which is the capital of business. If capital is high, companies do any or all of three things: One, they don’t borrow and cut back on production which means layoffs; two, they borrow but pass on the higher cost to consumers which means still higher prices of goods and three, if consumers resist the high prices, demand declines and the company is forced to cut costs or cut back on employment, which again means job losses.

The effect on the economy is a slowdown. Economic or GDP growth, after all, is net or minus the inflation rate. A robust economy, one growing at 6 to 7 percent, normally should create 1.5 million new jobs a year. If growth declines, those jobs are not created.

Since Marcos Jr. has been president since June 30, 2022, he naturally gets the flak for the price spiral during the first 17 months of his presidency. BBM gave up the agriculture Cabinet job on Nov. 3, 2023 when he appointed fisheries magnate Francisco Tiu Laurel as his successor at DA.

In the whole of 2023, average inflation rate rose to 6.0 percent, the highest in the last five years. The inflation rate was 5.2 percent in 2018, 2.4 percent in 2019 and 2020, 5.8 percent in 2022 and 6.0 last year.

Of the 12 months of 2023, the highest inflation rate was recorded in January 2023, 8.7 percent. The rate gradually decelerated to 3.9 percent by December to yield a 12-month average of 6 percent flat for 2023.

When BBM became president on June 30, 2022, rice nationwide was averaging P17.35 a kilo, according to the Philippine Statistics Authority. By November 2023, the average price of rice rose 26.6 percent to P21.96. It was up by 6.6 percent in a single month, from P20.209 per kilo in October to P21.96. In December 2023, Pulse Asia conducted its “Urgent Concerns” survey – when rice prices were elevated.Thus, Pulse Asia’s respondents were not exactly in a good mood.

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