In 2015, the government set the poverty threshold at P9,064 monthly for a family of five. Poverty threshold is the level of income that a family must receive to set it apart from those considered officially by the government as living in poverty. In 2015, the poverty threshold covers for that which is necessary to meet basic family need for food, P6,329, and non-food, P2,735 or a total of P9,064.
Inflation is the rate at which the general price level is rising. After two years from May 2015 to May this year, the general price level has gone up by 8.4 percent. That would make our poverty threshold rise to P9,830 by now after adjusting for inflation. Basing on this, therefore, the P10,000 income is still enough. It’s another story, of course, if you do not agree with the government on what the poverty threshold level should be. Many people don’t agree and this is where the present controversy lies.
Neda Undersecretary Edillon explained the controversy by saying that during the briefing on the latest inflation rate she only illustrated how a family of five would spend a hypothetical P10,000 in monthly income. It goes into food and non-alcoholic beverages, P3,834, alcoholic beverages, P158, and non-food, P6,008, that is for clothing, housing, transport, communication, education, health, etc. The controversy continues because many of our people received only P10,000 monthly or less and not a few are wondering how they really survive with the present high cost of living.
The 2015 Family Income and Expenditures Survey shows that the bottom 10 percent of our families only had P7,000 in average monthly income, the second bottom 10 percent, P9,500, and the third bottom 10 percent, P11,000. This explains the high poverty incidence in the country that was placed by the government at 21 percent of our population in 2015.
What is inflation again?
Inflation is the rate at which the general price level is rising. Inflation rate is usually measured using the changes in the cost of a basket of goods and services commonly purchased by households, called the consumer basket. The basket consists of the following: Food and alcoholic beverages; alcoholic beverages and tobacco; clothing and footwear; housing, water, electricity, and water, and other fuels; furnishing, house improvement, and routine maintenance; health; transportation; communication; recreation and culture; education; and restaurant and other miscellaneous expenses.
The cost of everything in our consumer basket rose by 4.6 percent year-on-year in May of 2018, after a 4.5 percent increase in the previous month. It is the highest inflation rate since 2011. Our inflation rate averaged 8.42 percent from 1958 until 2018, reaching an all-time high of 62.80 percent in September of 1984 and a record low of -2.10 percent in January of 1959.
Why do we care about inflation?
It is because inflation makes us poorer if our income do not increase. It hurts. And more so if in the midst of rising prices, we are only told by the government not to complain like crying babies.