Pulse Asia: Gov’t gets high marks in all nat’l issues but for rising prices
Most Filipinos see the need to control inflation as the most urgent issue that requires the government’s immediate attention, a recent Pulse Asia survey shows.
In the survey of 1,200 adults conducted from Sept. 17 to 21, 66 percent of the respondents cited inflation as the most important issue, followed by increasing workers’ pay at 44 percent; creating more jobs at 35 percent and reducing poverty at 34 percent.
The administration of President Ferdinand Marcos Jr. received mostly positive ratings in addressing various national issues, except in controlling the increasing prices of basic commodities.
The administration got high net approval ratings in 12 out of 13 national issues, with its highest net rating at +75 for responding in calamity-hit areas.
However, the national government received a -11 rating for its performance in addressing inflation.
Other national concerns were: fighting graft and corruption (22 percent), fighting criminality (19 percent), addressing involuntary hunger (17 percent), enforcing the law on influential or ordinary people (12 percent), providing support to micro, small and medium businesses (9 percent) and stopping environmental destruction and abuse (9 percent).
Controlling the spread of COVID-19 and defending the integrity of Philippine territory against foreigners were both at only 5 percent.
On Wednesday, the Philippine Statistics Authority reported that inflation rose to a four-year high of 6.9 percent in September from 6.3 percent a month ago, driven mainly by faster increases in the price of food and non-alcoholic beverages.
The 66 percent who regarded controlling inflation as the most urgent concern was nine percentage points higher than last June’s 57 percent, Pulse Asia said.
The Pulse Asia survey had a ± 2.8% error margin at 95 percent confidence level.
Economists on Thursday said minimum wage earners are expected to tighten their belts further because they are the ones most affected by the soaring inflation rate, which reduces their ability to spend for basic necessities and services.
Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said higher inflation would result in higher costs but lower profits for companies that may trigger job losses and layoffs.
“The inflation at a new four-year high of 6.9 percent would fundamentally reduce the purchasing power of Filipinos, especially the poor with limited incomes or budgets, as more of the income and savings would be allocated to paying for higher prices instead of increased spending on consumption, which account for about 68 percent of the economy,” he said.
“This is a global problem, as other developed countries have higher inflation rates of around 8 percent to 10 percent,” Ricafort said.
“Thus, the immediate response is to be conservative in spending by avoiding unnecessary expenditure, save more, and buy lower-priced alternative products and services,” he said.
Ricafort said that while minimum wages were increased by more than 6 percent in the middle of the year, prices of other goods and services posted bigger increases. “Thus, given limited incomes/budgets especially by the poor, they may have to tighten their belts further or could even borrow due to higher prices/inflation,” he said.
“The hardest hit sectors by higher inflation are the poor, in view of the limited incomes and budgets and skewed more on basic necessities such as food, shelter, utilities, transportation,” Ricafort told Manila Standard.
He said considering that the economy has just recovered from the adverse effects of the COVID-19 pandemic and lockdowns in terms of reduced employment, business and livelihood, higher prices would offset the gains as the economy opened further towards greater normalcy.
“Businesses and industries that are subject to higher competition from lower-priced alternatives locally and globally [such as competition from cheaper imports and other substitutes or alternatives] are at risk of absorbing the higher costs of operations to maintain competitiveness of their product offering that could lead to narrower or tighter profit margins, lower income, or could even lead to losses,” Ricafort said.
Ricafort said the resulting cost-cutting and austerity measures “could potentially lead to layoffs and job losses.”
Robert Dan Roces, chief economist of Security Bank Corp., said the 6.9-percent inflation will diminish the purchasing power of Filipinos.
In June, 14 regional wage boards issued their respective wage orders granting pay hikes ranging between P30 and P110. For instance, in the National Capital Region, the minimum wage was increased by P33 to P570 for workers in the non-agriculture sector and P533 for those in the agriculture sector.
In Central Luzon, the minimum wage ranges from P414 to P460, while that in Aurora province ranges from P344 to P409.
Despite these minimum wage increases, the poor will have to tighten their belts further or could even borrow due to higher inflation.
Meanwhile, Albay Rep. Joey Sarte Salceda, chairman of the House ways and means committee, recommended that President Marcos issue a string of executive actions to ensure that price increases are contained.
“The problem is primarily in food, feed, especially corn, and fuel. These are the most essential components of the basket of goods. And they are vulnerable, to some extent, to global price volatility due to imports,” Salceda said.
The peso’s weakness against the US dollar, global demand, and the high costs of fertilizer and fuel are threats to both the availability and affordability of the country’s food, feed and fuel supply, Salceda warned.
Salceda also warned that higher prices could lead to smuggling, and pointed out the need for better inter-island transport linkages.
Salceda said there was a need to ensure the domestic food supply, lower the costs of imported feeds and input products such as sugar, and optimize the use and supply of indigenous energy sources to lower dependence on imported oil.
He said a number of executive and administrative orders could address these needs.
These include orders to release all available financial and material resources for agriculture, to ensure that all supply bottlenecks for food and other farm producers are eased, and to direct local government units to lift all hindrances across farm-to-market routes.
He also recommended lowering tariffs on imported corn to 5 percent, or raising the minimum access volume, and increasing the current 150,000 MT import program for refined sugar under an auction system to generate revenues that can support domestic sugar production.
Also on Thursday, Makati City Rep. Luis Campos Jr. filed a House resolution urging the Bangko Sentral ng Pilipinas (BSP) to retain the existing limits on credit card charges to help Filipino consumers cope with rampant inflation.
In House Resolution No. 459, Campos pressed the banking regulator to preserve the 2 percent maximum monthly interest rate on unpaid outstanding credit card balances.
“We want the BSP to keep credit card pricing reasonable and within reach of consumers that are now reeling from the soaring cost of goods and services,” Campos said in a statement on Thursday.
“Salaried Filipinos are struggling to make ends meet. They are increasingly relying on their credit cards to make essential purchases and to pay bills, including the tuition fees of their children,” Campos said.
In his resolution, Campos also prodded the BSP to maintain the maximum 1 percent monthly add-on rate on credit card installment loans and a P200 per transaction ceiling on cash advance processing fees.
The BSP is set to review all three thresholds next month. In three prior semi-annual reviews, the banking regulator decided to keep the caps.
“The lifting of the ceilings would only aggravate the financial burden of consumers,” Campos said.
More than 10.3 million Filipinos have been issued credit cards. The banking system’s credit card receivables stood at P478.4 billion as of June 30, 2022, according to the BSP.