Inflation impact on poor picks up in April

inflation impact on poor picks up in april - Inflation impact on poor picks up in April

By Lourdes O. Pilar, Researcher

INFLATION, as experienced by low-income families, accelerated in April as lockdown measures were implemented to contain the spread of the coronavirus disease 2019 (COVID-19), the Philippine Statistics Authority reported on Thursday.

The inflation rate for the country’s bottom 30% income households figured in at 2.9% in April. This was faster than 2.4% in March, but slower compared to 3.1% in April 2019.

The latest reading brought the year-to-date pace for this income segment to 2.5%, still lower than the four-percent average in 2019’s comparable four months.

That compared to a 2.2% headline inflation experienced by the average household in April, which was slower than the 2.5% annual rate in March, and three percent in April 2019.

The inflation rate for the bottom 30% takes into account the spending patterns of this income segment. Thus, its consumer price index differs from that of the average household with the former assigning heavier weights on necessities.

In mid-March, the government placed Luzon under enhanced community quarantine (ECQ), which halted most economic activity. Metro Manila transitioned into a modified ECQ on May 16, while other parts of the country were placed under general community quarantine.

For April, the PSA noted higher annual increases in the following commodity groups: food and non-alcoholic beverages (2.3% from 1.1% in March 2020); health (3.6% from 3.4%); communication (0.3% from 0.2%); and restaurant and miscellaneous goods and services (2.7% from 2.6%).

The food-alone index for the poor was 2.2% in April, picking up from one percent the previous month.

Among select food items, faster price increases were observed in fruits (10.5% from 8.6%); vegetables (8.3% from 5.3%); food products “not elsewhere classified” (13.1% from 9.3%); oils and fats (1.8% from 1.3%); milk, cheese, and eggs (4.3% from 3.8%); and other cereals, flour, cereal preparation, bread, pasta, and other bakery products (2.7% from 2.4%).

The price for rice continued to decline by 3.9% in April, albeit slower compared to the six-percent drop in March. Corn also fell by 2% in April versus the 5.9% fall in the previous month.

Inflation experienced by poor households in Metro Manila eased to 1.7% in April from 1.9% in March. On the other hand, those living outside the capital saw inflation accelerate to 2.9% from 2.4% previously.

“The demand [among the bottom 30%] may have concentrated more on basic products, and it is known that the whole month of April was the height of the economic lockdown in the country. It is fitting to note that rice prices towards the end of March were actually trending higher,” said UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion in an e-mail.

The economist also noted the transport index’s 1.9% drop in April, a reversal of the annual pickup of 0.9% in March.

“The decline of the transportation index is attributed to the collapse of global oil prices. It is known that prices sharply declined as both Saudi Arabia and Russia failed to come to an agreement in their March meeting,” he said.

“The Philippines is a net importer of crude oil for its economic activities, and the Saudi-Russia issue has directly affected transportation costs and consequently demand driving prices downward.”

Mr. Asuncion expects inflation among lower-income households to pick up in the coming months.

“Although the increase is slow, the trend is clearly upward,” he said.

49918703098 1d46eb4279 o - Inflation impact on poor picks up in April

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