As prices of everything from oil to rice soar in the Philippines, Maria de Guzman has scrambled to adjust.
Her food bill has jumped 60 percent over the past year and now represents about half of monthly living expenses, prompting her family to scrimp on movies and even drive their car less.
“We don’t go out anymore,” said De Guzman, a 32-year-old university teacher in Manila. “These are things that we want to do, but we cannot. Even if it’s pay day, you don’t have money. It’s already spent or budgeted.”
Such financial pressure is being felt broadly in the nation and creating political headaches for Philippine President Rodrigo Duterte.
The Philippines is now home to the fastest inflation rate in Asia, which economists predict accelerated to 6.8 percent last month after a super typhoon damaged crops and oil prices rose.
If so, that would be the fastest pace since 2009, adding pressure on the central bank to keep raising interest rates.
Policymakers forecast annual inflation would exceed a target of 2 percent to 4 percent until next year.
“Strong action is what Bangko Sentral ng Pilipinas needs to shore up investors’ confidence,” said Lu Jiaxin, an economist for Continuum Economics in Singapore. “We continue to see more rate hikes. Rate hikes alone, however, are not likely to resolve the inflation issue and other non-monetary measures that deal with supply-side constraints are also crucial.”
While the Philippine economy is still among the most rapidly expanding in the world, the outlook is more uncertain.
The Asian Development Bank last week downgraded the nation’s growth forecast to 6.4 percent next year from 6.8 percent, the most in Southeast Asia.
That means more austerity for middle-class consumers.
Rose Urquico, 32, who used to drink and dine out as many as five times a week, is staying more at home and eating home-cooked meals. She also gave up yoga classes and limits visits to the hair salon.
“I’m tightening my belt and I’m trying to scrape savings together,” Urquico said. “More of my money now goes to food, rent and other expenses that are necessary.”
Some are even turning to growing their own food, like Czeriza Vigilia, a journalist who started a vegetable garden at home with string beans, tomatoes and chili peppers among her crops.
The central bank, which has faced criticism for being too slow to act, has delivered 150 basis points of interest-rate increases since May, but there are signs that the inflationary pressure is worsening, as wages are set to rise this month.
The government has approved higher water rates as well as fuel surcharges for airlines.
Duterte is rushing to fix the problem as a recent opinion poll showed rising prices might be taking a toll on his popularity.
The government is putting in place measures from police checks on overpricing to easier rules for food imports such as rice and sugar to boost domestic supply.
“People have been asking us to impose price controls, but we don’t believe in that kind of approach,” Philippine Secretary of Finance Carlos Dominguez said yesterday. “If you impose price controls, the items will just disappear from the market. So we’re addressing it by increasing supply.”
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