The country’s consumer price index (CPI) shows that as of May this year prices have increased so much since 1994 that the value of the Philippine peso has fallen by almost half.
By DANILO ARAÑA ARAO
The bad news is that with the exception of wages, practically everything is on the rise. Even worse news is the situation where the purchasing power of the peso has further decreased due to astronomical price increases since 1994.
As of May 2004, the country’s consumer price index (CPI) shows that prices have increased so much since 1994 that the value of the Philippine peso has already been cut by almost half.
The CPI is the basis for computing the inflation rate and uses 1994 as base year. The National Statistics Office (NSO), however, has started presenting CPI data which uses the year 2000 as base year.
In the Autonomous Region in Muslim Mindanao (ARMM), the value of one peso was pegged at P0.49 ($0.01, based on exchange rate of P55.88 per US dollar), the lowest in the country. On the other hand, Western Visayas had the highest purchasing power with P0.60 ($0.01). In Metro Manila, the purchasing power of the peso stood at P0.55 ($0.01), one centavo lower than the national average. (See Table)
Analyzing the data since May 2001, the decrease in purchasing power ranged from 5.8 percent (Cagayan Valley) to 12.3 percent (Cordillera Administrative Region or CAR).
For workers based in Metro Manila, this means that the P280 ($5.01) daily minimum wage is worth only P154.70 ($2.77) in real terms. Simply put, a worker in Metro Manila will now have to pay P280 for the same quantity and quality of goods worth only P154.70 in 1994.
Those working in the ARMM are in the worst rut since their daily minimum wage of P140 ($2.51), already the lowest in the country, is worth only P69.30 ($1.24).
Worse, these data have not yet factored in the impact of recent and impending price increases. Prices of petroleum products recently went up again triggering a hike in transportation fares. Beginning June 12, commuters started paying an additional P1.50 for the minimum fare in jeepneys. There are impending increases in electricity and water rates. Officials are also seriously considering imposing a 20 percent tax on text messages to increase government revenues. This simply implies that consumers may have to pay around P0.20 more for every text message they send which currently cost around P1.
The Arroyo administration and employers, meanwhile, stress that wage increases may not happen since this would allegedly complicate the already volatile nature of the economy. They rehashed the arguments that investors may pull out of the country if wages increased and that many business establishments will close down.