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DUBAI: Overseas Filipino workers should consider sending additional remittances back home as a temporary back-up for their families as they deal with elevated consumer prices, and the Philippine government’s refusal to rule out the possibility of steep price hikes until year end, a migrant labor expert said.
“The prices of commodities [in the Philippines], from food to fuel, have gone up so maybe OFWs should consider sending an additional 10 percent or even 20 percent to their families especially if they can afford to do so. Everything has gone up,” Emmanuel S. Geslani said in a telephone interview with Arab News.
“The increase in oil prices [on the world market] had a domino effect on the prices of consumer items, and adding financial pressure to OFW families as it is again enrolment season and they have to pay tuition fees for their kids who go to school,” Geslani added. “I know some OFWs may also be in a difficult situation in their workplaces, but for those who can afford to send additional support, maybe they should do so.”
The government on Tuesday said headline inflation rose 4.6 percent in May — versus 2.9 percent of the same month last year — driven mainly by price increases in fish and seafood, fuel and lubricants and bread and cereals. Average inflation during the five-month stretch was at 4.1 percent, just above the government’s 2 percent to 4 percent target for the year.
“The major catalysts include higher global crude oil prices at 3.5-year highs recently; the TRAIN Law that increased taxes on fuel and other goods and services; weaker peso exchange rate and higher local rice prices,” Michael L. Ricafort, head of the economics and industry research division at Rizal Commercial Banking Corporation, told Arab News. “These factors resulted in second-round inflation effects in terms of upward adjustments in the prices of affected goods and services.”
It is a bit of consolation though as Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines’ corporate research unit, expected last month’s consumer price basket to rise by 4.9 percent.
“However, it came in at 4.6 percent. Although it is the fastest in 4 years, it is still softer compared to expectations and slower than the previous months' expansions,” Asuncion said.
Legislators and vested groups have earlier called for the suspension of the Tax Reform for Acceleration and Inclusion law, which reduced personal income tax rates but raised the excise tax on petroleum products and automobiles, after crude oil price hit $80 a barrel in global trading and consumer prices spiked.
Their clamor was hinged on the notion that ultimately households were bearing the burden of TRAIN’s immediate effects on the economy. Previous surveys have estimated that one of every 10 Filipino households have at last one family member working overseas, whose cash remittances reached $28.1 billion in 2017.
The government economic team however was confident that inflation would taper off towards the end of 2018, even as it rejected the calls for the TRAIN law’s suspension.
“Though the 4.1 percent year-to-date inflation rate is slightly above the [government] target, we are still striking distance … there is no need to adjust inflation targets,” Benjamin E. Diokno, the secretary of budget and management, said during a press briefing on Tuesday. “There is consensus among the economic managers that inflation will taper off.”
“Suspending TRAIN and adopting other band-aid solutions will only have a minimal and short-term impact on inflation and will stifle our growth, further delaying our nation’s progress toward becoming an upper-middle-income country by 2019, such that around six million Filipinos would be lifted out of poverty by 2022,” Diokno added.
Still, both Asuncion and Ricafort see inflation rates to remain elevated for the most part of the year before reverting back to pre-TRAIN levels by 2019.
“Inflation could start to normalize lower in 2019, around January and February, exactly a year after the effectivity of the TRAIN Law,” Ricafort added.