Quimbo: Poor to increase by 2.58 million if food inflation rate persists

The number of poor Filipinos will increase 2.58 million this year if the food inflation rate persists, said House Appropriations Committee Senior Vice Chairperson Stella Quimbo of Marikina City. 

Quimbo, an economist, made the statement as the Marcos administration’s economic managers briefed the House Appropriations panel on Tuesday.

“With an 11.2 percent food inflation rate that we are currently experiencing, madadagdagan ng 2.58 million ang bilang ng mahihirap na Pilipino sa buong taon kung magtutuloy-tuloy ang inflation at this level. Kaya’t magandang malaman kung meron ba dapat baguhin o idagdag sa ating mga poverty reduction programs na nakasama na sa 2023 GAA (General Appropriations Act),” Quimbo said. 

(With the 11.2 percent food inflation rate, the number of poor Filipinos will increase by 2.58 million this year if this rate persists. So, it would be good to know if there is something that needs to be changed or added to the poverty reduction programs in the 2023 GAA.)

Quimbo added that the government should be able to raise more revenue due to inflation. The additional revenue could be used to aid the public amid the rising prices of basic commodities.

“An increase in prices of commodities affects the collection of value-added taxes. The BESF (Budget of Expenditures and Sources of Financing) indicates that a one percentage point increase in inflation yields an additional P30.4 billion pesos in revenues per year or about P2.53 billion per month. Applying this parameter, dahil nagtaas ng halos 5 percentage points ang inflation from the original 4 percent target, dapat nakalikom ang pamahalaan ng additional P11.9 billion pesos mula sa Value Added Tax (VAT) at iba pa sa buwan lamang ng January,” she said.

(Applying this parameter, because inflation is five points higher than the original four percent target, the government should have an additional P11.9 billion from Value Added and other taxes in January alone.)

“Certainly, additional revenue brought about by inflation must be used to help ease the burden borne by our kababayans. Magkano ang pwede natin gastusin para sa ayuda, sino ang makakatanggap, paano natin ito ibibigay, at kelan ito mabibigay,” Quimbo added.

(How much do we spend on assistance, who will receive it, how will we hand this out, and when do we hand it out.)

In response, Budget Secretary Amenah Pangandaman said the government was readying at least P9 billion in assistance for Conditional Cash Transfer beneficiaries. 

“We are responding to the President 's (Ferdinand Marcos Jr.'s) speech na tulungan po ang poorest of the poor,” Pangandaman said.

According to the DBM, more than P646 billion in assistance was allocated in the 2023 national budget for agriculture, manufacturing, and transportation.

There were also efforts to reduce importation and increase local production by providing support.

“The importation did not bring down prices but the counter factual is if we did not do anything, it would have even been higher,” Medalla said.

National Economic and Development Authority (NEDA) secretary Arsenio Balisacan said the government was allocating funds to help the agriculture sector.

He, however, warned against passing a law to increase wages.

“The Philippine Development Plan and the plan of this administration is to address this very low productivity in agriculture by investing in the right places — in irrigation, in farm to market roads, in technology, in access to markets and so on — and not forcing increases in wages by legislation. We can’t do that. It does more harm to the economy in the longer term than it benefits,” Balisacan said.

Bangko Sentral ng Pilipinas Governor Felipe Medalla meanwhile said the government’s strategy for slowing down inflation by selling dollars and raising interest rates was working.

"Selling dollars, raising interest rates, have been largely successful in limiting the second effects of inflation. What we prevent is the increase in prices on one [sector] will lead to increases in other sectors. It may take 20 months... 19 to 20 months before inflation will taper downward, counting from April last year,” Medalla said.

“Inflation will be below 4% maybe in December, November or December at the earliest,” Medalla added.

Nevertheless, economic managers said the inflation rate could possibly reach 8.5% to 9.3% this February, according to Tina Panganiban-Perez’s “24 Oras” report on Tuesday.

Last January, the inflation rate rose to 8.7%.

“Food and non-alcoholic beverages are the biggest contributors to inflation but the other point that must be added is that pressures on prices are broadening,” Medalla said.

“Top contributors to non-food inflation are utilities, food and beverage-serving services, actual rentals for housing, passenger transport services, and operation of personal transport equipment,” Department of Finance (DOF) Secretary Benjamin Diokno said. — DVM, GMA Integrated News