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Bu-lat-lat (boo-lat-lat) verb: to search, probe, investigate, inquire; to unearth facts Volume 2, Number 48 January 12 - 18, 2003 Quezon City, Philippines |
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Bu-lat-lat (boo-lat-lat) verb: to search, probe, investigate, inquire; to unearth facts Volume 2, Number 48 January 12 - 18, 2003 Quezon City, Philippines |
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Commentary Most recent data on purchasing power give credence to the militant labor sector’s call for substantial wage hike and the institution of price control, particularly for basic goods. By
DANILO ARAÑA ARAO Media reported last Jan. 7 the relatively low 2.6% inflation rate in December 2002. According to government, this brings the inflation rate for the whole of 2002 to 3.1%, much lower than the target range of 4.5% to 5.5 percent. The euphoria is there though government officials provide warning for what the future brings. Socioeconomic Planning Secretary Romulo Neri clarifies that the country’s inflation is expected to increase “in the coming months due to external developments and the possible recurrence of the El Niño dry spell.” For his part, Central Bank Gov. Rafael Buenaventura stresses that the first half of 2003 would be a very challenging “due to the combined pressure from the brewing US-Iraq conflict, the drought and the budget deficit.” Their views, no matter how circumspect, still lead the people to ask: What do the current data mean to those who are poor? Does a low inflation rate translate to more buying power? Low
purchasing power
Based on the December 2002 consumer price index (CPI), the basis for computing the inflation rate, it appears that the value of the Philippine peso is substantially eroded. In Metro Manila, the purchasing power of the peso (PPP) is P0.58 ($0.0108 at an exchange rate of P53.595 per US dollar). In other regions, the PPP ranges from P0.52 or $0.0097 (ARMM) to P0.64 or $0.0119 (Central Mindanao). These regional data bring the PPP’s national average to P0.59 ($0.0110). PPP refers to buying capacity compared to a given base year. The National Statistics Office (NSO) currently uses 1994 as base year in computing the CPI. An analysis of the past years’ data shows a downtrend in the PPP. In December 1997, the PPP was pegged at P0.78 ($0.0146) which slowly decreased to P0.70 or $0.0131 (Dec 1998), P0.68 or $0.0127 (Dec 1999), P0.63 or $0.0118 (Dec 2000), P0.61 or $0.0114 (Dec 2001) and P0.59 or $0.0110 (Dec 2002). Low
real value
The current PPP shows that the real value of one’s money is much lower than its nominal value. In the context of wages, the current daily minimum wage in Metro Manila of P280 ($5.2244) has a real value of only P139.11 ($2.5956). In other words, prices have increased so much since 1994 (i.e., base year) that a person currently needs P280 ($5.2244) to buy goods and services which in 1994 cost only P139.11 ($2.5956). The Autonomous Region in Muslim Mindanao (ARMM) has the lowest PPP, with the daily minimum wage of P140 ($2.6122) posting a real value of only P73.53 ($1.3720). (See table below) Indeed, these data give credence to the militant labor sector’s call for substantial wage hike and the institution of price control, particularly for basic goods. Bulatlat.com
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