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STREET vendors selling vegetables, fruits and other commodities may have helped keep inflation low and stable in September, according to local analysts and economists.
On Tuesday, the Philippine Statistics Authority (PSA) revealed that inflation slowed to 2.3 percent in September, the lowest since May, when inflation was at 2.1 percent.
Inflation was 2.4 percent in August and 0.9 percent in September 2019. Inflation between January and September averaged 2.5 percent this year.
“Insurance [ambulant vendors play a role in keeping prices low and stable]. They can serve as effective conduits of food supply, especially for the poorest households, ”Cid Terosa, dean of the University of Asia and the Pacific, told BusinessMirror.
The principal investigator of the Philippine Institute of Development Studies (PIDS), José Ramón G. Albert, told this newspaper that inflation so far has been low and stable.
Albert said the only difference now is that Filipinos are not buying as much food and non-food items as they used to do before the pandemic.
He said that customers, including himself, would now buy from street vendors who roam the towns and streets to sell their wares. Some of these vendors would sell products that can be purchased at lower prices than groceries.
“Informal vendors can help control [the possibility of] having big spikes in the prices of most foods, “said Albert. “Why would he buy oranges at P70 per piece? He went to P80 even at [name of grocery store]—If I can buy 3 for P100 with the maglalako [ambulant vendor]? Albert said.
However, BPI chief economist Emilio S. Neri Jr. said there may be some suppliers that would charge more than groceries.
Neri said that many informal vendors would source their supply of groceries and offer deliveries to justify giving their products a higher price.
However, vendor sales are not entered in the inflation data, according to the PSA. National Statistician Claire Dennis S. Map told BusinessMirror that only fixed outlets in markets are included in their data collection.
“The price division informed me that only fixed points of sale in the markets are part of the sample. Mobile phones are not part of the price collection points of sale, ”he said.
Mapa said that vegetables, meat, milk, cheese and eggs were among the biggest contributors to inflation in September 2020.
The data showed that vegetable prices contracted 2.7 percent in September; the increase in meat prices was reduced to 2.9 percent; and milk, cheese and eggs were reduced to 2.4 percent.
For food inflation at the country level, it continued to decelerate to 1.5 percent during the month, from 1.7 percent in August 2020. In September 2019, food inflation was recorded at -1.3 percent. hundred.
By food groups, the rice and corn indices presented an annual decrease of -0.6 percent during the month. Also, the vegetable index fell further to -2.7 percent during the period.
Inflation for the poor
The PSA said that inflation for the poorest 30 percent of the population remained higher than the general inflation rate for all households. This, Mapa said, has been the case since April this year.
While inflation for all households averaged 2.3 percent in September, inflation for the poorest households reached 2.8 percent in the same month. The rise in commodity prices seen by the poorest Filipinos averaged 2.6 percent between January and September this year.
Mapa said inflation for the bottom 30 percent was at 2.9 percent in April, higher than the inflation rate for all households at 2.2 percent. This trend continued until September of this year.
“If you look at our previous inflation reports, there were months when food [items] posted higher [prices]. Food inflation, as I mentioned, had a higher weight in the bottom 30 percent, about 58 percent. So if there are spikes in our food basket, that will lead to higher inflation for the bottom 30 percent, ”said Mapa.
However, in September, Mapa said the slowdown in food prices failed to offset the impact of higher housing, water, electricity and gas prices, as well as transportation costs, on inflation that the poorest households experience.
Transportation was particularly high in September. In Metro Manila alone, Mapa said, tricycle fares averaged P18.6 in September 2020, an increase of 119 percent from the P8.50 average in September 2019.
Apart from this, ING Bank Manila senior economist Nicholas Antonio T. Mapa said in an email that the rise in inflation for the poorest was due to base effects.
With this, he said, the government must provide safeguards for vulnerable sectors of society, especially since they also “face a very discouraging and challenging labor market.”
“I think the disparity is due to the fall in the prices of non-essential products that are heavy in the basket of the rich. The price of the basic products on which the poor spend has remained constant or has increased, ”added Neri.
PSA’s Mapa and Terosa also expressed concern that given the trend, the country’s poor are likely to suffer higher inflation in the coming months.
Terosa said that the higher inflation experienced by the poorest households is also linked to the decrease in their income caused by unemployment. This will lead to an uphill battle to meet the country’s poverty goals this year.
urban areas
Previously, the acting secretary for socio-economic planning, Karl Kendrick T. Chua, said that the pandemic has significantly affected urban areas such as Metro Manila and Cebu due to the increased number of Covid-19 cases in these areas.
These economic centers experienced longer lockdowns that kept millions from working and caused them to recede or fall further into poverty.
“Income inequality is expected to increase given the more rapid loss of market income among poor households and their inability to cushion the impact of the pandemic on their economic well-being,” Terosa said.
September prices
In September and in the last three months, inflation at NCR remained at 2.2 percent. In September 2019, inflation stood at 0.9 percent.
The annual rate of the index for housing, water, electricity, gas and other fuels rose to 0.6 percent during the month, from an annual decrease of -0.2 percent in the previous month.
In addition, greater annual increases were observed in the indices of clothing and footwear (1.2 percent), communication (0.2 percent) and education (0.6 percent).
Inflation at AONCR followed the national trend, as it slowed further to 2.4 percent in September 2020, from 2.5 percent in the previous month. In September 2019, inflation in the area was recorded at 0.9 percent.
The recreation and culture index continued its downward trend at an annual rate of -0.7 percent in September 2020; so did Food and non-alcoholic beverages, 1.6 percent; Alcoholic beverages and tobacco, 13.3 percent; Clothing and footwear, 2 percent; and Furniture, household goods and routine home maintenance, 3.2 percent.
Core inflation, which excludes certain food and energy, rose to 3.2 percent in September 2020, from 3.1 percent the previous month. Core inflation in September 2019 was 2.7 percent.
