The truth about why living in the Philippines costs more than it should
In Brgy. Cupang, Muntinlupa, Lorna starts her day preparing fermented paste for her siomai cart. She’ll begin selling at noon and will end her day at midnight. Rest is not an option If she wants her daughter and grandchild fed. Now in her late 40s, she’s been selling on the sidewalks since 2016.
In the past year, she had to raise her prices to account for the increase in the cost of ingredients. When asked what comes to mind when she hears the word “inflation,” she responds with questioning eyes. While a global phenomenon, inflation remains a vague concept for the most vulnerable.
Inflation is most visible in our everyday food consumption. This is illustrated by the Consumer Price Index (CPI), which measures drastic changes in the costs of goods over time.
Instead of measuring each item in the market, the CPI bundles products regularly bought together by the average consumer. Think of it as a basket of everything you need to survive daily. A year ago, your P1,000 could buy 3 kilos of pork and 2 cartons of milk. Now, P1,000 can only go as far as 2 kilos of pork and a single carton of milk. This signifies our decreasing purchasing power.
When the COVID-19 pandemic sent the world to a standstill, the economy didn’t function the way it was programmed. The government borrowed money and in turn, households received subsidies—a way to keep the money in rotation or, simply, the economy alive.
But to keep market prices stable, the number of goods available must always match what people want to buy. However, due to road closures and high fuel prices, businesses were unable to get the supplies they needed to produce the same amount of goods. Demand increased while the supply remained low, tipping the scale.
Soon enough, news of soaring inflation rates flooded the mainstream media. In December 2022, inflation peaked at 8.1%, the worst spike in over a decade. Supply-driven, as experts would say. Perhaps this was already expected in the midst of our recovering economy, but high costs trickling down to the average Filipino now meant putting in long hours of hard work without much return.
As the Philippines emerged from a grueling two-year pandemic, it remains buried under massive debts: P13.91 trillion to be exact.
JC Punongbayan, an assistant professor at the University of the Philippines School of Economics, shares that in 2021, the government set the poverty threshold at P12,030 per month. “This is the average income needed to meet the minimum basic food and non-food essentials of a family of five. For that family size, this translates to a little over P77 per member per day.” He continues, “But what can that amount buy, really? This figure is not realistic, especially as inflation shot up in 2022 and early 2023 to 14-year highs.”
This threshold is crucial as it determines the eligibility of families for aid and monetary assistance. It's an amount indicative of how far our government will support households in the margins.
“There’s a need to account for other dimensions of poverty besides a focus on income. You may have an income higher than the poverty threshold, but you can still be poor if you don’t have access to education and health facilities. In other words, we need to have a ‘multidimensional’ take on poverty,” Punongbayan emphasizes.
Inflation further accentuates class inequality. For students fresh out of college, individuals looking to shift careers, or ordinary workers dreaming to unroot themselves from unlivable wages, hopes and dreams start to get blurry. As the Philippines emerged from a grueling two-year pandemic, it remains buried under massive debts: P13.91 trillion to be exact.
Filipinos, often lauded as madiskarte, have always been the ones to adjust.
In Lorna’s household in Muntinlupa, even the modest indulgence of a weekly fruit salad became a rarity as prices of commodities skyrocketed. Erwin, a food delivery rider for 2 years now, says he tries to budget by using fewer appliances. While King, who’s been working in a lechon joint for 8 years, shares how his salary is no longer sufficient for their needs. His family, with a grade schooler and a PWD, skips breakfast to get by.
Filipinos, often lauded as madiskarte, have always been the ones to adjust. Punongbayan lists the ways we’ve learned to survive: “From buying tingi-tingi, taking multiple jobs, getting emergency payday loans, cutting back on luxuries, asking for remittances from relatives, and maximizing ayuda from the government.” These have become strategic coping mechanisms. “But these can only do so much.”
Punongbayan shares that the Bangko ng Sentral ng Pilipinas (BSP) took measures by raising policy rates—a big move from an economic standpoint. Despite this, food remains outside their scope. “BSP implored other government agencies, particularly the Department of Agriculture, to implement ‘non-monetary’ policies to temper food inflation. Unfortunately, over the past year, the government largely failed to control prices.”
Lowering inflation relies largely on government intervention. Punongbayan emphasizes the need to address long-term agricultural issues such as low productivity. There must be investment and financial support in place to ensure each sector is padded amid economic instability—something that should come easy, now that the president is our agriculture secretary.
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Dr. JC Punongbayan is an assistant professor at the University of the Philippines School of Economics (UPSE). He earned his PhD from UPSE in 2021, where he also graduated summa cum laude. His first book, False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them, is currently in its third printing.