LYCEUM OF THE PHILIPPINES UNIVERSITY- CAVITE

COLLEGE OF ENGINEERING, COMPUTER STUDIES

& ARCHITECTURE

RESEARCH WORK:
PHILIPPINES’ GDP

in partial fulfillment
of the project in the subject

ECON01G

submitted by:
MAJHE JOYCE ANNE I. CERINO
BS Architecture / Arch 501

submitted to:
MS. CATTY LEA C. GAMO
CONTENTS

 Copy of the article

 Summary of the article

 Critique or reaction in the article

SUMMARY OF THE ARTICLE

Inflation rate in the Philippines jumps to 41-month high of 3.9 -percent in February
from the 3.4-percent in the previous month and greatly exceeding last February’s 3.1-
percent according to data by Philippine Statistics Authority.

The sudden increase in the country’s inflation rate is said to be brought about by
the increase in prices of food and non-alcoholic drinks as well as alcoholic beverages and
tobacco products. The increase in prices is due to the higher tax payment required by the
law.

In particular, the food sector recorded a 4.8-percent annual markup in prices in

February. The biggest contributors are corn and meat products as well as fruits, rice,
cereals, flour, bread, pasta, milk, cheese, and egg. Restaurants and miscellaneous goods
and services, transport, health as well as furnishing and household equipment and
maintenance, recorded higher annual price.

The increase is consumer prices is mostly felt in Metro Manila which recorded a
4.7-percent inflation rate. This is mainly due to the increase in prices of alcoholic
beverages and tobacco as well as food and non-alcoholic drinks, especially in Metro
Manila where demands are high.

According to PSA, until June 2018 they will use the 2006 data for estimating the
country’s inflation rate and then eventually will use the 2012 data that is more representing
of the common purchases of households.

Using the 2006 base data, the estimated inflation rate in February is 4.5-percent,
which is still within the central bank’s old inflation target of 4 to 4.8-percent.
CRITIQUE OR REACTION IN ARTICLE

High inflation rates in the country have many implications on the daily lives of the
Filipino people especially the majority of the country’s citizens which are the low to middle
income households.

During an inflation rate, prices of goods and services are increasing at a faster
pace resulting into a weaker purchasing power of the local currency weaker. This means
that the value of the money decreases. In simpler words, inflation is the general increase
in prices of products and services. This includes import and export cost, labor cost, and
prices of consumer goods.

According to the article, the increase of inflation rate in the country is mainly
brought about by the new excise tax implemented upon certain goods and services. This
higher tax implementation is part of the Duterte administration’s tax reform program. The
new program aims to redesign the country’s tax system to be simpler, fairer, and more
efficient for all, while raising the resources needed to invest in infrastructure and people.
The tax reform program includes increasing excise taxes on petroleum products, on
automobiles, and on sweetened beverages. Sin taxes imposed on alcoholic and tobacco
products contribute to the increase of the prices of these commodities.

Some say that the TRAIN (Tax Reform for Acceleration and Inclusion) law may
threaten and breach the government’s target inflation rate of at least 2-percent to 4-
percent. It is said that the TRAIN law has direct and indirect impacts and effects on the
cost of commodities. This is particularly felt by the poor who only earn minimally. Increase
in the prices of basic commodities will greatly challenge their capacity for daily survival
with limited purchasing power due to high inflation rate.

Increase in excise taxes is naturally passed on the consumer through the increase
in the goods and services’ prices. Increase in oil prices will strike public utility drivers to
pursue increase transport fees, also those who owns automobiles will suffer from
expensive oil prices. Increase in excise tax on sweetened products and beverages which
definitely increase prices of goods which will be a direct blow to the consumers’ budget.
 I was personally astonished to learn that a sachet of powdered juice is now costing
Php 18.00 from Php 11.00. Also prices of carbonated drinks such as soft drinks also
increases.

For people who earns very little, his or her income will not be able to keep up with
the rate of inflation. This would make a strong impact on their quality of living. High
inflation rate particularly makes it difficult for low-income people to pay for their basic
household and living expenses.

Low-income people will find it difficult to pay for basic essential items for housing,
food, and utilities if the prices suddenly increase beyond their purchasing capability. This
could make their already difficult living situation more tight and scarce.

Life and work balance can also be affected as they would try to earn more money
to be able to have enough money to buy essential needs. This could lead to longer
working hours and additional jobs. Still, working for extended hours and acquiring
additional job is not an assurance of stability. This also has an effect on the amount of
time the provider spends with his and her family outside work. Extended working hours
and additional jobs means shorter time at home for spending quality time with the family.

Healthcare can also be sacrificed in order to provide for the more urgent need in
the family like food, clothing, housing, and education. This is very observable especially
in the case of the provider who most of the time will neglect self and healthcare to ensure
enough earning to bring home to the family.

Rising cost for education can also make it unaffordable for low-income people.
Children of low-income parents might have to make a decision to drop-out of college or
be a working student as to help their family pay for all the expenses.

High inflation rate can also hurt people’s savings as they need more money to
spend. This is very impactful for many people specially those who are living of their
savings such as elder people
 Economically, it is ideal to maintain a certain level of inflation that will keep the
economy running at a steady pace while growing as well. Moderate inflation is a sign of
a healthy economy, however high inflation can cause problems.

Aside from the reasons stated above, high inflation can also be socially harmful.
High inflation makes the gap between rich and poor people more massive. In widening
the gap between rich and poor, high prices create general discontentment among the
masses. This may lead to many awful scenarios like workers pressed by rising cost of
living, to resort to strikes for wage increase. If strikes happen, the production can come
to halt lowering supply. Opportunistic behavior may also prevail as to gain more profit,
one may resort to hoarding and manufacturing of substandard commodities. If
hyperinflation persist, the value of money would then continue to fall and would ultimately
lead to the collapse of the monetary system. All of these scenarios gravely reduces the
efficiency of the economy.

The rise in the price of goods can really affect the quality of life of people especially
of those who earn only minimally. The effect of high inflation rate might be indirect at first
glance but as it cycle in the economy, financially-tight families may suffer many
consequences and hardships due to higher cost of living. High inflation rate greatly
diminish the consumers’ purchasing power. This could affect the economy if the people
cannot buy necessities for adequate living.

Most often, inflation is noticed as a side effect of fast economic growth. When
income rises, demand also rises which in turn make prices rise, thus inflation happen.
However, this scenario is not happening in the country, increase in and growth in the
country’s economy are only felt by high-income people, living poor people to wallow and
suffer in the increasing strain high inflation has brought upon their already unstable way
of living.

Certain measures must be undertaken by the government as to protect the interest

of the vulnerable in this time of high inflation. The indirect effect of TRAIN law to low-
income people must be taken into consideration, to ensure an economic growth that all
Filipino can feel and strive from.