Consumers deal with weaker peso power amid surging inflation

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Metro Manila (CNN Philippines, July 5) — Jenn Pineda used to frequent the market daily to buy ingredients for her day-to-day cooking, with high prices of goods being the least of her worries.

But that was before the COVID-19 pandemic happened, she stressed.

“Since nagtaas na lahat ng bilhin pati fare, every other day na lang ako namamalengke,” Pineda, who runs a local eatery, told CNN Philippines.

[Translation: Since commodities have gotten more expensive along with transport fares, I only go to the market every other day.]

Pineda is but only one of many Filipinos bearing the brunt of higher commodity prices, which have gone up even quicker in June, amid a lingering global health crisis.

Inflation hit 6.1% during the month — marking the first time the 6% mark was breached since nearly four years ago.

The Philippine Statistics Authority also reported a 6.1% pace in November 2018. Move a bit back and you’ll see it was even higher in September and October that year at 6.9%.

And when goods get more expensive, consumers’ wallets take a beating, too.

PSA data show a decline in the purchasing power of the peso , which refers to the amount of goods and services it can purchase with one unit of currency.

It is a function of the consumer price index, which indicates change in the average prices of goods and services the public generally avails relative to a base year. On a year-on-year basis, this change is known as inflation.

PSA figures show ₱1 in 2018 is now only worth 87 centavos as of June, the lowest since the start of the base year.

Dahil tumataas ‘yung inflation natin through the years, ine-expect natin bumababa talaga ‘yung ating purchasing power,” explained PSA chief Dennis Mapa.

[Translation: Since inflation rises through the years, we expect our purchasing power to go down.]

The purchasing power of the peso slid below ₱1 in August 2018, where it stayed - albeit decreasingly - within the 90-centavo mark until February this year when it hit 89 centavos.

These figures are reflected in the daily experiences of Filipinos.

Kung dati ang budget ko na ₱2,000 eh pang-dalawang araw na paninda, ngayon ₱2,000 mo pang-isang araw na lang kasi sa mahal ng mga sangkap,” recalled Pineda, citing double-digit increases in sugar and cooking oil.

[Translation: If I was able to produce two days’ worth of viands with a budget of ₱2,000, now it only lasts a day because of how costly the ingredients have become.]

Roxanne Abestilla told CNN Philippines her family has a set budget of ₱8,000 per month for groceries consisting of packaged food, dairy products, toiletries, and laundry needs.

“However, just two weeks ago, my family went grocery shopping and got the things that we usually get but it cost 12,000 pesos already,” said Abestilla, a graduating college student who comes from a family of four.

The Abestilla family used to purchase fresh produce from the grocery store in bulk, lasting them a month. Now, they get their supply in retail from the local market.

“As per the fresh produce, the 2,000-peso budget only lasts 3-4 days nowadays,” she said.

While Mapa said the country isn’t going through hyperinflation yet, he added the agency is still seeing further price increases especially among food items.

June’s rate brought year-to-date inflation for 2022 so far to 4.4%, surpassing the 2-4% target band of the Bangko Sentral ng Pilipinas for the year.

And it doesn't end there: the BSP sees inflation averaging 5% this year and 4.2% in 2023 - staying above-target until easing within the expected range by 2024.

While the central bank has been raising interest rates since May to curb inflation and authorities have been distributing billions of pesos in cash assistance for poor households, consumers like Pineda have to make do for now.

Sa hirap ng buhay dahil napakamahal ng bilihin eh pagalingan na lang sa diskarte,” she concluded.

[Translation: Given how difficult life is now due to expensive prices of goods, you really have to be practical.]