UP Dean: Cash transfer not enough to compensate poor families amid high inflation

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Metro Manila (CNN Philippines, August 16) — The government's unconditional cash transfer program is not enough to help poor Filipino families cope with the adverse effects of the tax reform program, an expert said Thursday.

This, as the poorest 30 percent of the population suffer the most from the continuous rise in the prices of widely-used goods.

"The effect of inflation on poor households is really high. It's estimated between 5.5 percent [and] 6 percent this year. Last year it was 3.1 percent, so almost doubled," University of the Philippines-Diliman School of Statistics Dean Dennis Mapa said during a Senate joint hearing on the price impact of the TRAIN law.

Under the policy, a cash subsidy worth P200 will be given to at least 10 million monthly as a measure to mitigate the burden on the poor.

But Mapa said the basis of the computation for the cash aid is underestimated, since it is based on the assumption that the family size is five. He said the fertility rate of the poorest 20 percent is five, so the average poor family's size is seven.

"The assumption of cash transfers using five members is really an under estimation," he said. "This suggestion is just telling us that we may have to consider family size as an input in the computation of the cash transfer."

Mapa said poor households are the most affected by high inflation, which last month reached 5.7. percent--the highest in the last five years.

"During the first seven months of 2018 the poorest 30 percent of the population suffered the most from increasing prices of goods particularly food items like rice. Based on our estimates we have higher inflation for poorest households," Mapa added.

He said households spend 38.34 percent of their budget on food, but for the poorest 30 percent of the population, food takes up 60.89 percent of their budget.

A provision of the TRAIN law also gives poor households a 10 percent discount when they buy the P32 per kilo rice from the National Food Authority, Mapa said.  With the discount, poor families should paying around P29 per kilo, but because of a lack of supply from the NFA, they were forced to buy rice sold at P39 per kilo from January to June, he added.

CNN Philippines' Robert Vergara contributed to this report.