Bulatlat.com

Purchasing Power Plunges:
One Peso is Now Worth P0.62

Can one peso be equal to 62 centavos? This seems to be the case if one were to compare the nominal value of one peso with its real value. For workers earning a minimum wage, this can only mean even lower purchasing power from their already meager income.

BY DANILO ARAÑA ARAO
Bulatlat.com

Prices have increased so much in recent years that the buying power of the people’s hard-earned money has substantially diminished.

Computations of Bulatlat.com show that the purchasing power of the peso (PPP) as of July 2001 has now dipped to only P0.62.

The PPP refers to the real value of one peso which is extrapolated from the prevailing consumer price index (CPI). The latter is an indicator to measure fluctuations in the prices of selected goods and services. (PPP may be computed by using the equation 1/CPI x 100.)

At present, the government uses 1994 as the base year for the CPI, which compares the current purchasing power to the buying power seven years ago.

This means that at present, a person will need, say, P100 (US$1.96) to buy goods and services that can be otherwise bought for only P62 ($1.21) in 1994. The example illustrates the erosion of the peso by 38 percent of its value.

Given that the average legislated daily wage rate in the Philippines is P212.58 ($4.16), the real value of the daily national minimum wage is P130.82 ($2.56) as of July 2001. The real value is computed by multiplying the nominal (or face) value of a given amount by the computed purchasing power (e.g., P212.58 x 0.6154).

The legislated daily wage rate was last adjusted in November 2000, and organized labor groups have been calling for an across-the-board P125 ($2.45) daily wage hike nationwide.

At present, the minimum wage ranges from P140 ($2.74) in the Autonomous Region of Muslim Mindanao to P250 ($4.90) in Metro Manila.

In the wake of the Asian financial crisis in July 1997, the PPP was pegged at 80 centavos ($0.015). The next three years saw the PPP being further eroded to 72 centavos ($0.014, July 1998), 69 centavos (($0.013, July 1999) and 66 centavos ($0.012, July 2000). Bulatlat.com

Getting the Real Value of Your Hard-Earned Wages *(Bulatlat.com* Estimates based on July 2001 Consumer Price Index)**
	Nominal Value	Purchasing Power of the Peso	Real Value
Philippines a/	212.58	0.6154	130.82
Metro Manila	250.00	0.6105	152.63
Areas outside Metro Manila b/	175.17	0.6173	108.13

CAR	169.00	0.6443	108.89
Region I (Ilocos)	185.00	0.6250	115.63
Region II (Cagayan Valley)	180.00	0.6254	112.57
Region III (Central Luzon)	208.50	0.6262	130.56
Region IV (Southern Tagalog)	217.00	0.6064	131.59
Region V (Bicol)	182.00	0.5811	105.76
Region VI (Western Visayas)	170.00	0.6477	110.11
Region VII (Central Visayas)	180.00	0.5790	104.22
Region VIII (Eastern Visayas)	177.00	0.5999	106.18
Region IX (Western Mindanao)	165.00	0.6242	102.99
Region X (Northern Mindanao)	173.00	0.6158	106.53
Region XI (Southern Mindanao)	170.00	0.6452	109.68
Region XII (Central Mindanao)	150.00	0.6627	99.41
ARMM	140.00	0.6329	88.61
CARAGA	161.00	0.5476	88.16
*a/ nominal value is the average of nominal wages in Metro Manila and Areas outside Metro Manila* *b/ nominal value is the average of nominal wages in 15 regions outside Metro Manila*

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