CONSUMERS this year were not able to enjoy much of their high take-home pay, as the high inflation rate took a heavy toll on their finances.
“Filipinos continue to tighten their belts,” said retailer Robert Go, president of Philippine Retailers Association-Cebu Chapter.
This is amid the government’s effort to exempt those with annual taxable income below P250,000 from paying personal income taxes, while the rest of the taxpayers, except the richest, will see lower tax rates ranging from 15 percent to 30 percent by 2023, under the first package of the Tax Reform for Acceleration and Inclusion (Train) Law, which took effect at the start of 2018.
For small business owners, 2018 was a slow year for them, as they had to contend with big competitors.
A sari-sari store owner for 13 years, Elizabeth Cabahug, 72, would earn more than P1,000 from her sari-sari store in Liloan in past years.
“Now, it’s just P300 a day. This was after a big mall opened, and it was accessible to the residents in the barangay,” she told SunStar Cebu.
Cabahug, who sells a variety of grocery items, from milk to soap, said most of the products became more expensive.
“Before, I would sell reams of cigarettes. Now I only sell two packs because it’s too pricey, and only my loyal patrons would buy from my store,” she said.
She said there were only two sari-sari stores in the area before, but now, the competitors have tripled.
“We became some sort of a last resort; a back-up when they really need to buy necessities immediately, because they prefer going to the mall and buying it (goods) from there,” she said.
According to Go, retail performance for 2018 seems to have grown in value, but it was flat in quantity or volume.
“Due to inflation, the discretionary income has decreased,” he said.
Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.
Central Visayas suffered a high inflation rate of seven percent in September, which slowed down to six percent in November.
As of November 2018, the country’s year-to-date inflation averaged 5.2 percent.
This is 1.2 percentage points above the high end of the government’s inflation target range of two to four percent, but slightly below the 5.3 percent emerging forecast of the Bangko Sentral ng Pilipinas (BSP) for 2018.
According to Go, the retail community saw a shift of preference to lower priced goods instead of premium brands.
Food consumption though, remains the same, but the purchase of non-food items has declined. People bought staples while personal goods like garments, household items, furniture appliances dropped in sales, he said.
Go, who runs the chain of Prince Hypermart stores, also noted that sales of beverages declined, as well as sales in tobacco, liquor and sugary drinks. The Train law also imposed an excise tax on sugary drinks and tobacco.
“Apparently, the slowdown is attributed to lower household spending in food and necessities. Prices continue to rise 6.3 percent in the third quarter,” said the PRA- Cebu official.
“Consumer confidence declined due to decreasing readiness to spend,” he noted.
Liezel Sollano, who runs a catering service, also noticed a decline in orders.
Sollano said that from 2015 to 2016, they would even hire helpers to assist during functions. But now, she does all the cooking herself.
“Mostly, it will be short orders from my clients who always came back to avail of our catering services. There were only two catering companies before. But now, there are a lot, and some of my customers already went to them,” she said.
She said even if that was the case, occasional orders still keep her busy, especially during peak seasons like Christmas.
Sollano said they also increased the rate per head because of the increase of the prices of ingredients.
“From the vegetables to the meat, prices really went up. So we had to add the charges for our services,” she said.
From their past rate of P220 per head, it now costs P230.
“Good thing that I still have my suki, who would often avail themselves of my services for about four events in a year. So in a way, the income can still suffice,” she said.
During the Cebu leg of the government’s consultative Sulong Forum, Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo explained that inflation for the past 10 months has been supply-driven, with the increase in oil prices in the global market as one of the major contributors.
But he noted that they are not expecting the inflation rate this year to be replicated in 2019 and 2020.
He anchored the BSP’s outlook on recent developments, both in external and internal fronts, which have shown signs of improvement.
Guinigundo explained they are seeing prices of fuel in the world market going down, the impact of Train tapering off, stable rice supply in the market, and government implementing mitigating measures to temper inflation.
The BSP official said they expect consumer spending in the last quarter of the year to remain robust.
“This reflects the result of the consumer expectation survey that showed consumers are now more optimistic in the last quarter of the year, precisely because of the holiday, start of the harvest season and the implementation of public and private projects, which all mean jobs,” said Guinigundo.
The BSP emphasized that despite the domestic pressures and softening in the global market, the country is poised to continue its healthy growth story.
He said the country has enough buffers for the next 10 years for it to grow inclusively and continue its growth momentum.
Filipinos, he said, can bank on the country’s positive economic growth in the last 76 consecutive quarters or 19 consecutive years, a testament to its resilience amid global and domestic pressures.