The government should start offering financial aid directly to lower-income households and vulnerable groups to mitigate the effects of inflation, as the nation’s consumer price index (CPI) last month soared to 3.59 percent year-on-year, reaching the highest level in about 14 years. For lower-income households, inflation surged 3.97 percent, Directorate-General of Budget, Accounting and Statistics (DGBAS) data show.
Food prices rose 7.27 percent and accounted for about 28.4 percent of the nation’s CPI basket, higher than Singapore’s 21.1 percent, China’s 18.7 percent and South Korea’s 14.4 percent. The rapidly rising CPI has driven up living costs by 3.36 percent, while the cost of eating out rose 6.38 percent, it said.
Spikes in food prices have led to fears of food insecurity and even hunger for lower-income households and those living below the poverty line, as CPI increases have eroded their income and weakened their purchasing power. While wealthier families can switch to less expensive food or buy in bulk to offset price increases, those options might not be available to low-income households. Some in lower-income households or those living below the poverty line have cut back from three meals per day to two, or have tried to eat less to save money, local media reported. Declining income is another factor affecting their eating habits, as there are fewer part-time jobs available.
Some developed and emerging countries have started tackling the effects of inflation on lower-income households and vulnerable groups by offering food and energy subsidies. France last week launched a new round of measures costing about 20 billion euros (US$20.18 billion) to fight inflation, seeking to help more workers this time around. Paris earlier this year spent 26 billion euros on energy price caps and fuel discounts for firms and households.
Southeast Asian nations are offering similar aid. The Singaporean government last month announced an anti-inflation package worth S$1.5 billion (US$1.1 billion) to help lower-income families and vulnerable groups with direct payments and rebates. The package, which takes effect next month, also includes utility credits and subsidies for households and small businesses, Bloomberg reported. Singapore’s inflation has risen at its fastest rate in 10 years to 3.3 percent.
In Malaysia, the government said it would give households in the bottom 40 percent income bracket a one-time 100 ringgit (US$22.59) payment, while individuals in that same bracket would receive 50 ringgit. Nikkei Asia reported that the program is expected to cost 630 million ringgit. To prevent inflation from spiking, the government also froze electricity and water rates last month.
Aside from freezing electricity rates, Taiwan should provide direct financial aid to lower-income families and those living under the poverty line. Those groups are facing greater challenges to cope with inflation than higher earners. The nation’s “robust” GDP growth — at 3.91 percent this year, as estimated by the DGBAS — and “healthy fundamentals” government officials like to talk about do not mean anything for those struggling financially. The nation’s GDP growth is heavily reliant on exports and the semiconductor industry. The growth is uneven across the economy, and mounting inflation is widening the gap between the poor and the wealthy.
Lower-income households and vulnerable groups need financial support now. They need to feed their families. The government’s newly announced subsidies for renters and the tourism sector are scarcely enough to meet the urgent needs of low-income earners.
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