Bottom 30% faced 5.3% inflation in Q1, highest in four years–PSA

By Cai Ordinario, BusinessMirror, Apr 30, 2018

In Photo: A store owner arranges stacks of dried fish at Puerto Princesa City market in Palawan. Data from the Philippine Statistics Authority shows the increase in the price of essential food items in the first quarter of 2018 hit the poor the hardest.

The poorest 30 percent of households in the country saw inflation reach 5.3 percent in the first quarter of 2018, according to the Philippine Statistics Authority (PSA).

This is the highest since the third quarter of 2014 when inflation experienced by the poorest was at 6.8 percent. In the first quarter of 2017, inflation for the bottom 30 percent of households was at 2.8 percent.

National Economic and Development Authority (Neda) Undersecretary Rosemarie G. Edillon told the BusinessMirror that the increase in the prices of commodities consumed by the poor may be due to high demand and supply disruption issues.

“There will always be an increase in prices on account of higher demand due to higher income and growing population. There could also be supply issues due to calamities, traffic and increases in the cost of other production inputs,” Edillon said.

Ateneo Center for Economic Research and Development Director Alvin P. Ang told BusinessMirror the increase was largely due to higher prices of fish and corn.

The food alone index posted a growth of 5.3 percent in the first three months of the year. Ang, however, said there was an increase in all food commodity prices vis-à-vis the last quarter of 2017.

Whether the increase in commodity prices will impact or worsen poverty this year remains to be seen. The Family Income and Expenditure Survey will be conducted this year and the results will be released next year.

Ang said, however, that since the latest data from the PSA may not have factored in government interventions, the impact of high commodity prices on the poorest Filipinos could be cushioned.

“The release of the unconditional cash transfer [for a] full year could [not only] help cushion [commodity price increase], but also improvement in government coordination and communication,” Ang said.

Edillon added that with the Consumer Price Index (CPI) for bottom 30 percent income households data still not rebased, the inflation being experienced by the poorest may not reflect the current situation.

The country’s CPI was recently rebased to 2012, but the CPI for the bottom 30 percent was still based on 2000. This may have implications on the rate of inflation the poorest are experiencing now.

Apart from rebasing the CPI to 2012, the PSA also used chaining, which can pave the way for an improved method of computing the country’s GDP.

The chain volume measure is a means to compute economic growth using chained prices. The formula used to compute GDP in chained prices is not dependent on an assigned base year, which is now being used to compute GDP in constant prices.

When using chained prices, the base year cancels out in the formula and only the constant and current prices will be able to affect the outcome.

“We think this statistic should be improved in order to reflect the true situation being faced by the poor. By improvements, we mean updating the base year from the current 2000 and focusing more on the bottom 20 percent,” Edillon said.

Meanwhile, the PSA’s data also showed that households classified as the poorest 30 percent who are living in Metro Manila or the National Capital Region (NCR) experienced even higher inflation at 5.9 percent in the first quarter of the year.

In the previous quarter, inflation settled to 4.7 percent, while in the first quarter of 2017, it was observed at 5.4 percent.

A higher annual increase of 5.4 percent was registered in the food alone index in the area during the first quarter of 2018.

Its annual rate in the previous quarter was pegged at 3.9 percent. In the first quarter of 2017, food alone index increased at an annual rate of 5.5 percent in NCR.

Further, annual inflation in areas outside NCR (AONCR) for the bottom 30 percent income households picked up by 5.3 percent during the first quarter of 2018.

In the previous quarter, the annual growth was posted at 3.4 percent and in the first quarter of 2017, 2.7 percent.

The food alone index in AONCR rose by 5.3 percent in the first quarter of 2018. In the previous quarter, the index picked up by 3.4 percent and in the first quarter of 2017, 2.7 percent.