The rising inflation in Western Visayas is increasingly squeezing household budgets, particularly for the bottom 30 percent of income earners.
As inflation climbed to 4.3 percent in May 2024 from 4.1 percent in April, many families find it harder to afford essential goods and services.
This inflationary trend, driven by key sectors like food, housing, and transport, poses significant challenges for maintaining purchasing power, especially for those already economically vulnerable.
Food prices have remained a major driver of inflation, contributing 2.97 percentage points to the overall rate. Although the growth rate for food prices slightly decreased to 7.0 percent in May from 7.3 percent in April, staples such as cereals and cereal products, particularly rice, saw persistently high inflation rates. These basic commodities, with cereals alone contributing 5.43 percentage points, underscore the heavy burden on household food budgets.
The decline in prices of Housing, Water, Electricity, Gas, and Other Fuels sector slowed, significantly influencing overall inflation. From a -2.2 percent decrease in April, it shrank only to -0.3 percent in May, reflecting higher costs in utility and energy-related expenses. This sector’s inflation trend is critical as it encompasses essential living costs, making even slight changes impactful on household finances.
Transport costs surged from 3.1 percent in April to 3.8 percent in May. This increase, reflecting higher fuel prices and transportation fees, directly affects commuting expenses and the cost of goods, further straining household budgets.
Inflation in the Restaurants and Accommodation Services category increased to 5.5 percent in May, driven by higher dining and accommodation costs. As these services become more expensive, discretionary spending for households diminishes, limiting their ability to afford non-essential goods and services.
The inflation rate for the bottom 30 percent of income households rose to 5.4 percent in May from 5.2 percent in April, significantly affecting their financial stability. With a higher proportion of their income spent on essentials, any increase in prices disproportionately impacts these households.
The primary contributors include food and non-alcoholic beverages, representing 56.9 percent of their expenses, food inflation at 8.2 percent heavily weighs on their overall cost of living. Although the rate of decline in housing costs slowed, it still negatively impacted their budget, showing a -1.5 percent decrease compared to -4.6 percent previously.
The purchasing power of the peso continues to decline, with one peso in 2018 now worth only 78 centavos. This erosion means households need more money to buy the same amount of goods and services, exacerbating the strain from inflation.
What can we do amid the untamed inflation?
Households need to re-evaluate their budgets, prioritizing essential over non-essential spending. Monitoring expenses and cutting back on non-critical purchases can provide some relief.
Exploring more affordable alternatives for daily needs, such as opting for cheaper brands or bulk buying, can help mitigate the impact of rising prices.
Engaging in community support programs and advocating for governmental assistance or subsidies can offer some respite, particularly for the most affected groups.
Enhancing financial literacy and planning can empower households to manage their finances better, make informed spending decisions, and explore savings and investment options.
The sustained inflation in Western Visayas necessitates urgent attention and adaptive strategies from both the government and the public. By understanding the primary drivers and their impacts, households can better navigate these economic challenges, although structural interventions are crucial for long-term relief and stability.
