TRAIN, Inflation, and Poverty

Undersecretary Rosemarie Edillon

NEDA Policy and Planning
June 5, 2018
 May 2018 Inflation Figures
May Apr YTD 2018
Inflation
2018 2018
Philippines
Headline 4.6 4.5 4.1
Core 3.6 3.5 3.3
NCR
Headline 4.9 5.2 4.9
Areas Outside NCR
Headline 4.6 4.3 3.9

30
 Commodity Group May-18 April-18
Y-O-Y M-O-M Y-O-Y M-O-M
ALL ITEMS 4.6 0.0 4.5 0.5
Food and Non-Alcoholic Beverages 5.7 -0.1 5.9 0.4
Alcoholic Beverages and Tobacco 20.5 0.8 20.0 1.3
Clothing and Footwear 2.2 0.2 2.2 0.3
Housing, Water, Electricity, Gas, and Other -0.2 0.5
Fuels 3.0 3.0
Furnishing, Household Equipment and
Routine Maintenance of the House 2.9 0.2 2.8 0.3
Health 2.8 0.1 2.8 0.3
Transport 6.2 1.0 4.9 0.8
Communication 0.3 0.0 0.3 0.0
Recreation and Culture 1.5 0.1 1.5 0.1
Education 1.8 0.0 1.8 0.0
Restaurant and Miscellaneous Goods and 0.4 0.4
Services 3.7 3.4
Inflation is mainly driven by fish and seafood,
fuel and lubricants, and bread and cereals
Top 10 Contributors to May 2018 Inflation
Commodity Group Contribution to Inflation
(in percentage pts)
Fish and Seafood 0.65
Fuel and Lubricants for Personal Transport Equipment 0.60
Bread and Cereals 0.56
Restaurants, Cafes and the Like 0.36
Actual Rentals Paid by Tenants 0.30
Meat 0.30
Tobacco 0.26
Mineral Water, Soft Drinks, Fruit and Vegetable Juices 0.24
Vegetables 0.18
Gas 0.16
Monthly Consumer Basket of an Average Filipino Family
Item Amount
FOOD AND NON-ALCOHOLIC 3,834
BEVERAGES
Rice 959
Meat 625
Fish 574
Vegetables 260
* Non-alcoholic Beverages 288
ALCOHOLIC BEVERAGES AND TOBACCO 158
Alcoholic Beverages 65
Tobacco 93
NON-FOOD 6,008
CLOTHING AND FOOTWEAR 293
HOUSING, WATER, ELECTRICITY, GAS &
OTH. FUELS 2,204
Actual Rentals for Housing 1,288
Electricity, Gas & Other Fuels 744
FURNISHINGS, HH EQUIPMENT AND
ROUTINE MAINTENANCE 295
Monthly Consumer Basket of an Average Filipino Family

Item Amount
HEALTH 389
TRANSPORT 806
Operation of Personal Transport Equipment 247
Transport Services 483
COMMUNICATION 293
RECREATION AND CULTURE 141
EDUCATION 328
RESTAURANTS AND MISCELLANEOUS GOODS AND
SERVICES 1,259
Catering Services 805
Personal Care 380
TOTAL 10,000
 Additional cost due to inflation,
assuming an initial P10,000 monthly budget
Commodity Group Amount
Total 459

Structural, external: 255

Rice 41
Meat 30
Fish 65
Vegetables 18
Actual Rentals for Housing 30
oil related* 70
Tax related: 52
Non-alcoholic Beverages 28
Tobacco 2
oil related* 21

Others 153
What major factors caused the price increase?

7.0
Contribution to Food and Rice

Non-alcoholic Beverages Inflation 5.7 Corn

6.0
January 2016 to May 2018
Meat
5.0
Fish

Milk, Cheese, & Eggs

4.0

Oils & Fats

3.0
Fruit

Vegetables
2.0
Sugar, Jam, Honey,
Chocolate, & Confectionery
1.0
Food Products N.E.C.

* Non-alcoholic Beverages
0.0
Oct
Nov
Dec

Oct
Nov
Dec
Mar
Apr

Mar
Apr

Mar
Jan

May
Jun
Jul
Aug
Sep

Jan

May

Apr
Jun
Jul
Aug
Sep

Jan

May
Feb

Feb

Feb
FOOD & NON-ALCOHOLIC
BEVERAGES
-1.0 2016 2017 2018

Source: PSA, NEDA-NPPS

What major factors caused the price increase?

FISH – Declining fish catch

MEAT – High cost of feeds

FUEL – Rising international crude oil prices

RICE – Market panic

 Sharp rise in prices of rice and fresh
produce is pushing food inflation
Inflation Rate of Major Contributors to Overall Inflation, Food
Items, Jan 2016 - May 2018
16.0

14.0

12.0

10.0

8.0

6.0

4.0

2.0

0.0
Jan

Jun
Jul

Jan
Feb

Jun
Jul

Jan
Feb

Feb
Mar

Dec

Mar

Mar
May

Oct
Nov

May

Oct
Nov
Dec

May
Apr

Aug
Sep

Apr

Aug
Sep

Apr
-2.0

-4.0 2016 2017 2018

Rice Meat, fresh, chilled or frozen
Fish, fresh, chilled or frozen Seafood, fresh, chilled or frozen
Domestic petrol prices have increased, following
international movement
Domestic Petrol Prices
(in peso per liter)
60
56.59

50 50.67

43.66
40
36.30

30

20

10

0
Jan
Feb

Jun
Jul

Oct

Jan
Feb

Jun
Jul

Oct

Jan
Feb
May

May

May
Mar

Nov
Dec

Sep

Nov
Dec
Mar

Mar
Aug
Sep

Aug
Apr

Apr

Apr
2016 2017 2018
ULG Diesel Oil Kerosene LPG
The elevated inflation in electricity, petroleum, and fuels for
personal transport equipment and transport services was
partly influenced by higher oil spot prices.

Dubai Crude Oil Prices (US$ per barrel)

80 Jan 2016 - May 2018 74.413
70 68.271
60

50

40

30

20

10

0
Jul

Nov
Dec

Jul

Oct
Nov
Dec
Jan
Feb

Jun

Jan
Feb

Jun

Jan
Feb
Mar

Oct

Mar

Mar
May

May

May
Apr

Apr

Apr
Aug
Sep

Aug
Sep
2016 2017 2018

Source: Department of Energy and oilprice.com

 Filipinos pay almost twice as much for rice
compared to other countries
45
Local vs. International Rice Prices
40
(in peso per kg) 38.95
35
in peso per kg

30
21.96
25
20.88
20

15 19.32

10

0
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018 (May)
Pakistan (25% brokens)
Thailand (25% brokens)
Vietnam (25% brokens)
Philippines (RMR)
Sources:
NEDA-ANRES
FAO at http://www.fao.org/giews/pricetool/
BSP at http://www.bsp.gov.ph/statistics/efs_ext3.asp
Note: Exchange Rate is monthly average
High rice prices hurt majority of Filipinos...
72% of Filipinos are net consumers of rice
% of Net Rice Consumers vs Rice Producers: 2012

100%

28%

75%
66%

Net Producers
50%
Net Consumers

72%

25%
34%

0%
All Philippine Households Rice Producing Households
Source: Survey of Food Demand for Agricultural Commodities 2012
High rice prices hurt the poor the most
Poor families spend over 60% of their budget on food,
almost 20% on rice.
% Share of Rice, Other Food, & Non-Food in Total Expenditure: 2015
100.0

90.0

80.0 38.7
44.7
70.0

60.0

50.0

40.0 42.0
40.8
30.0

20.0

10.0 19.3 14.5

-
Poorest 20% 2nd poorest 20%
Rice Expenditure Other Food Expenditure Non-Food Expenditure
Note: PSA, NEDA-NPPS
 Seasonally adjusted inflation indicate
temporary price pressures may be easing
Seasonally Adjusted Month-on-Month Inflation Rate (%)
ALL ITEMS CPI (2012=100), May 2017 - May 2018
0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
2017 2018
TRAIN, Inflation, and Poverty