By Jochebed B. Gonzales, Senior Researcher
INFLATION, as experienced by low income households, stood at 9.5% in October, driven by sharp price upticks in food and utilities, the government reported on Friday.
The October inflation turnout for goods and services used by households at the bottom 30% income segment matched September’s 9.5% print, which was the fastest since the first quarter of 2009’s 12.3%, based on available data from the Philippine Statistics Authority’s Web site. It also accelerated from the 3.4% year on year price increase recorded in the same month a year ago.
The latest reading brought the segment’s year to date inflation to 7.0%, higher than the 2.9% average during last year’s comparable period.
The Consumer Price Index for the bottom 30% income segment reconfigures the model basket of goods to reflect a heavier weighting for food, beverages and tobacco (FBT) index. This and other weightings are regarded to more accurately capture the spending patterns of the poor.
FBT recorded the highest uptick among commodity groups, rising 10.7% year on year from 3.3% in October 2017. The food alone index logged a 9.8% growth with rice and corn prices climbing 11.5% and 5.6%, respectively.
Fruits and vegetables registered a 14.2% price growth while fish and meat prices rose 12.6% and 7.1%, respectively.
The cost of utilities, consisting of fuel, light and water, accelerated to 9.8% from 6.5% a year ago. Higher annual markups were also recorded in housing and repairs (5.1% from 2.8%), services (3.5% from 1.8%), clothing (2.9% from 1.3%) and miscellaneous goods (2.2% from 1.3%).
By region, inflation on goods used by poor households was highest in Mimaropa at 15.8%. Also seeing double-digit inflation were the regions of Ilocos (12.6%), Cagayan Valley (11.7%), Western Visayas (11.7%), Bicol (10.5%) and Central Visayas (10.1%).
Summing up the regions apart from the nation’s capital, inflation for the bottom 30% income segment in areas outside the National Capital Region came in at 9.5%. Metro Manila, on the other hand, was lower with 6.9% price growth.
Sought for comment, Michael L. Ricafort, economist at Rizal Commercial Banking Corp., pointed to faster increases in food and fuel prices.
“Food prices that have relatively higher inflation weights such as rice, corn, fish, fruits and vegetables posted a relatively higher increase in 2018, especially amid reduced local supply brought about by lower importation of rice that led to shortage/reduced market supply of cheap NFA (National Food Authority) rice earlier this year,” he said, noting that the low income segment purchased the more expensive commercial varieties of rice.
Mr. Ricafort added, “The sharp increase in global crude oil/fuel prices earlier in 2018 resulted (in) much higher expenses by households from the lowest income brackets since transport/fuel costs account for a higher share of their budgets/expenditures as a result of lower income base, thereby magnifying the adverse impact of higher transport fares and other fuel expenses compared to higher-income groups.”
He also pointed out: “Inflation of the lowest income brackets, higher than the headline inflation for all income segments, could ease by a much faster rate, given the dramatic decline in global oil prices….”
“Furthermore, harvest season for rice and the proposed tariffication of rice imports and other non-monetary measures to increase rice/food supply in an effort to reduce prices could have a bigger impact on the reduction of inflation for the bottom 30% income segment than on higher income segments.”