I ventured into an emerging food franchise sometime last November. To try and entice customers, we offered a glass of free iced tea with every meal. Back then, it only cost us about PHP8 max to make an entire pitcher of the stuff.
Fast forward to about three months later when the TRAIN law was in full effect. I sent one of my staffers to restock our sachets of iced tea powder, only to find out that they’ve pretty much doubled in price. Now, an additional PHP8 on its own isn’t much, admittedly, but when you factor in how that can quickly multiply with the number of pitchers we were serving every day and how every cent counts for a fledgling business that’s struggling to break even, you’ll probably understand why we had to promptly put an end to our free iced tea.
That’s my TRAIN story. I’m sure there are far more and far worse ones out there too, ones that probably go beyond the consequences of the sugar tax.
If you’ve also been feeling the pinch, you’d best brace yourself. The inflation rate last month surpassed the five year-high rate from the one prior, and isn’t likely to let up soon. As a result, trips to the grocery and to the gasoline store will probably be a little more painful on our wallets now. Ouch.
“Oil prices are really going up. They have been going up consistently in the past several weeks. Also the depreciation of the peso and the TRAIN [law] is also a culprit,” reported Socioeconomic Planning Secretary Ernesto Pernia, “I think it will be an issue most of the year. Maybe it will peter out in the last quarter of the year.”
The Philippine Statistics Authority (PSA) also noted much faster movement in the prices of several commodities back in March. The indices of several groups were said to have increased as follows:
Alcoholic Beverages and Tobacco (20.0%)
Clothing and Footwear (2.2%)
Housing, Water, Electricity, Gas, and Other Fuels (3.0%)
Furnishing, Household Equipment, and Routine Maintenance of the House (2.8%)
Recreation and Culture (1.5%)
Restaurant and Miscellaneous Goods and Services (3.4%)
In addition to this, the higher electricity rates in Meralco (Manila Electric Company)-serviced areas have been seen to contribute to additional price pressures.
Now, if you benefited from the decreased income taxes, you might be able to withstand the rising prices. However, lower-income households who were already tax-exempt to begin with will feel a significant deterioration of their purchasing power.
OFW’s and their families may find the weaker peso to their benefit, but it remains to be seen whether the incremental remittances will compensate for the higher costs of living, especially with the projections for the rest of the year being what they are.