NO one is spared from the skyrocketing prices of basic goods these days.
It’s not only the poor who are taking a hit from the rising prices. Even those earning more are feeling the pressure, as the cost of food and household utilities have also affected their disposable incomes.
Music school director Pia Quisido, a mother of three, admitted she feels the pinch compared to the previous months when her P500-gasoline budget, which used to last her three to four days, is now only good for two days.
Quisido runs one of the popular music schools in Cebu called Rock Republic. Quisido said she drives the same route, the same frequency around the city, either for meetings and then back to school and at home.
Quisido said inflation has hurt consumers’ buying power, making them pay more for the same goods and services. But she said this is an event she doesn’t have any control over.
“I can’t do anything about this inflation. I’ll just continue to work harder so my income will increase and I’ll get to pay these bills and so I can afford to buy food,” she said, adding that their consumption remains the same and that life continues as usual for them, occasionally dining out and watching movies.
“These rising prices surely impact our wallet, but if we keep on complaining, we are drawing in negative energy, making us unproductive,” Quisido said, noting that no matter how high food prices are, people will continue to buy them anyway.
Inflation jumped to 6.4 percent in August, the highest level in almost a decade, as oil and rice prices picked up. Last month’s inflation exceeded the July level of 5.7 percent and topped the Bangko Sentral ng Pilipinas’ (BSP) worst-case scenario estimate for the month.
In the first eight months of the year, inflation averaged 4.8 percent, well above the central bank’s two to four percent target range for the year. BSP Governor Nestor Espenilla Jr. said the faster-than-expected inflation was mainly due to “food supply shocks,” particularly in the rice market. Prices of food and non-alcoholic beverages surged 8.5 percent while transport costs spiked 7.8 percent last month.
Entrepreneur Alice Uy, who is also a mother of two, said the higher take home pay of employees as a result of the Tax Reform for Acceleration and Inclusion (Train) law is now being robbed in form of high prices of commodities.
“Every Filipino now more than ever needs to have more than one source of income to survive,” she said, adding that she is no different from other consumers who are paying higher grocery bills.
Uy said there should be more livelihood programs provided to give more Filipinos additional income.
Aware that prices have gone up quickly from the past months, Marie Cecille Dakay has changed her buying habits. She said she doesn’t splurge on anything she wants and that she practices careful buying.
“I eat at home, unless we have guests, so we dine out. But when it comes to my personal money, I don’t go out at all. If I spend more on something, it’s for my son,” said Dakay, whose family runs Shemberg Marketing Corp.
Anticipated slowdown
Moreover, higher excise taxes slapped on other goods and services have also fueled inflation.
Specifically, the entire automotive industry saw fewer buyers now, posting weaker sales since the start of the year due to the Train Law implementation.
Steve Gingco, general manager of Isuzu Cebu Inc., said carmakers and dealers were affected by the overall 14 percent decrease of vehicle sales.
He said passenger car dealers experienced more adverse effects from the Train Law, with an 18-percent sales drop due to the price sensitivity of the smaller car segment.
Commercial vehicle dealers, on the other hand, also went through a 14-percent sales decline due to the price increase of its volume-driver mid-size sports-utility vehicle (SUV) segment.
According to Gingco, the decline in sales this year can be attributed to the advance vehicle purchases last year, particularly in the last two months of 2017 in anticipation of the Train Law implementation. The new excise tax also adversely affected sales on popular sedan and SUV models.
National vehicle sales averaged about 32,000 units per month; while Central Visayas averaged about 2,600 units sold a month from the close to 40,000 units per month on average.
Michael Goho, vice president and chief operating officer of Gateway Motors Inc., said the tax reform program has had the biggest effect on the premium segment, which include luxury brands such as BMW. But, he said expected losses this year were offset last year.
“We noticed a sense of urgency among the general public to buy their luxury dream cars last year before prices shot up,” he said.
Although there is a minimal price increase for mass market car brands such as Nissan and Toyota, Goho said the market has adjusted to the new prices, allowing them to still see positive output every month, with stable and steady growth in sales volume.
“We are optimistic of the continuous progress in the industry. I can say Cebuanos truly have deeper pockets this time around,” said Goho. “Cebuanos have also set higher standards and are now more knowledgeable and this completely revolutionized the buying and selling process.”
Shift
However, due to price consideration, Gingco said buyers’ preference is shifting toward smaller sedans, compact SUVs and pick-up models.
Mini and sub-compact sedans have the least increase with the new excise tax, while pick-up vehicles were exempted from the new excise tax.
Mini and sub-compact sedan sales contributed about 30 percent of the total industry, while pick-up truck sales increased by 14 percent, said Gingco. Although mid-size SUVs posted a decrease in sales, its volume still comprises 14 percent of the total industry sales.
Buying of real estate will remain robust this year, although some real estate brokers expect slight adjustments in the buying preferences of consumers, depending on their economic background.
Real estate broker Arnold Nolasco of Filipino Homes said home buying will continue for those with deep pockets because of their high spending power and the low currency exchange rate of the peso, as most of their clients are direct buyers and dollar earners.
Herbert Buot, president of the Chamber of Real Estate and Builders’ Associations, Inc. (Creba) Cebu, said they expect local buyers to tighten their belts a bit when it comes to home spending.
He said those who have allocated a budget to buy a unit through installments may redirect these savings into buying food and other basic necessities for now. Buot expects temporary postponements in home buying for those whose salaries are not enough to compete with the rising inflation.
But he quickly pointed out that as long as other factors stabilize and prices eventually go down, the brisk home buying will continue and those who have made up their minds to invest in properties will pursue their plan.
“To a positive mind, there will always be solutions,” he said.