The Philippine peso is growing stronger and monetary studies are saying consumers will benefit from this through the lowering of the cost of fuel and other goods. But a trip to the grocery tells a different story.
If fuel is becoming cheaper because the peso is growing stronger against the United States dollar, then there should also be a lowering of prices of goods that have fuel components. That should cover the price of food products such as vegetables, poultry, and rice, for example, because they do have fuel costs inputted by their producers and distributors. Yet, consumers are not seeing items getting cheaper as fuel gets cheaper.
The impact on the cost of fuel is only one way that consumers can benefit from a stronger peso. There are other manifestations of this but the real test is if the reduction in prices got reflected directly in the consumers’ buying power.
For several days, the exchange rate for the US dollar has been going down. Since March 16, the dollar has kept to the P54 level from the highs of previous weeks. One needs fewer pesos to buy dollars now. If you buy imported goods, you would use fewer pesos compared to weeks earlier.
The Bangko Sentral ng Pilipinas says in an explanation on the exchange rate impact that “a firm peso confers benefits to the economy—the consumers in general (by tempering the general rise in prices of goods and services or inflation arising from increases in international prices of imported or import-based commodities), importers, Filipinos who travel or invest abroad, and those who pay for foreign loans (including the government and the taxpayers in general).”
It adds: “A firmer peso helps dampen inflationary pressures. A firmer peso can temper inflation from increases in the price of imported commodities, including milk, wheat and oil.” Imported goods such as fuel are cheaper whenever the dollar weakens and the peso is stronger. The BSP resource document made in 2007 can be found at www.bsp.gov.ph/Media_and_Research/Primers%20Faqs/fximpact.pdf.
There is no mention, however, of how soon the impact of a stronger peso can be felt by consumers. A recent check of grocery prices showed no movement that it appeared the imported items were still pegged at the time the US dollar was stronger. Fuel prices went down for two consecutive weeks but prices of goods and services remained the same as in early March. Perhaps it is too soon but the monitoring should begin.
To ensure consumers will benefit, as the BSP said in its resource document, government agencies tasked to monitor the prices of goods and services have to check outlets that sell these to the public. Private sector-led watchdogs have to be encouraged to do their own checking and put pressure on manufacturers and distributors to adjust prices so consumers can benefit from the movement in the value of the peso. Otherwise, only a few will enjoy the benefits.