By Chino Leyco
Inflation continued to soften last month as prices of basic goods and services sustained the snail’s pace pickup since the start of the year that benefited not only the government, through a low interest rate environment, but also majority of Filipino consumers.
Finance Undersecretary Gil S. Beltran said the main benefit of the slower inflation will be that the income growth rate of many Filipinos which is now faster than the pace of inflation.
“They can buy now the goods affordable to them because inflation is low. Income is rising faster than the level of prices. They can consume better and buy quality goods and other services,” said Beltran, who is also the Department of Finance chief economist.
“Not only consumers benefit from the cheaper prices of basic goods, but also the entire government bureaucracy,” Finance Assistant Secretary Ma. Teresa S. Habitan said.
Habitan explained that weak inflation would eventually bring-down the government’s interest payments, as well as reduce the costs of goods and services it buys, like fuels, office supplies and utilities.
Den Magdurulang, a call center agent in Taguig City, heard the news that inflation has already cooled down this year from record highs in 2018 that took a toll on his purchasing power.
Based on the Philippine Statistics Authority (PSA) data, fuel expenses in October settled lower compared to a year ago, which Madurulang, 34, believes was the reason why the minimum jeepney fare has not increased from the present P9.
The Bangko Sentral ng Pilipinas (BSP) has also trimmed its key interest rates by a total of 75 basis points this year, and is expected to further reduce the yields next year to help fuel the economy through higher consumer spending.
Mandurulang, who also works as a part-time insurance agent, admitted that majority of Filipino clients consider the future rate of returns before making a decision to invest in an insurance policy or not.
But he shares the current low interest rate environment, which is seen to remain in the medium term, will not be a hindrance for many Filipinos to buy an insurance product as this will be a long-term investment and protection.
“We always emphasize our trust and how strong our fund manager is. At the end of the day, these are projections, not a guarantee. What we can guarantee is the coverage of the policy we made for our clients,” Magdurulang stated.
The PSA also reported that rice maintained its year-on-year decline as prices of the Filipino staple food dropped for the sixth straight month with a 9.7 percent deflation. Prices of corn, vegetables, and sugar products also fell by 1.3 percent in October.
But Mary Rose Penacerrada, a mother from Coloocan who spends around P7,000 to 8,000 a week on meals for her husband, Harold, and their two children, said prices of basis food items have not changed contrary to the PSA data.
Penacerrada, with her children Ralph, 10, and Matthew, 4, shared that the price of the Sinandomeng variant remained at P48 per kilo despite the implementation of the controversial Rice Tariffication Law.
“Lower prices of rice is only in the news, but not in the actual market. I asked why the price of Sinandomeng remains high, but the vendor said that their supplier is the one dictating the retail price of it,” Penacerrada said.
She also claimed that they did feel the effects of higher take-home pay following the passage of the tax reform for acceleration and inclusion (TRAIN) act.
“The salary has not changed, but prices of basics goods continue to rise,” said Penacerrada who nevertheless admitted that she and her husband could still afford to dine out with their children at least once or more times per week.
Read more: Inflation eases to 0.8 percent in October