by Frederick John Santos, JULY 2022
Now that the government relaxes the COVID-19 restrictions, the Philippine economy is recovering from the pandemic-induced economic downturn. Last month, the British banking giant HSBC hikes the Philippine gross domestic product (GDP) growth forecast to 6.5 percent – a faster economic growth for the Philippines in 2022, as domestic consumer spending is seen supporting the recovery of the country’s economy.
While the high GDP growth was indeed good for the economy, the recovery wasn’t really felt by the majority as prices of goods and services continue to rise higher over time, and that is referred to as inflation.
In June 2022, the Philippines’ inflation rate hits a three-year high of 6.1 percent from 5.4 percent recorded in May 2022 as the impact of soaring global oil prices affects other goods, the latest figure reported by the Philippine Statistics Authority (PSA) on June 7.
What is more alarming is that it can shoot up to 8.1 percent if the conflict between Russia and Ukraine escalates, said House Committee of Ways and Mean Chairman Rep. Joey Salceda, who is also an economist, in an interview with ANC.
How does it affect you?
Back in 2008, you can buy Selecta’s Cornetto ice cream, famous for “Saan aabot ang bente mo?” TV advertisement, for only P20. That same amount can’t get you a piece of Cornetto today because for over a decade now, it has already cost around P25 to P33 in the market and that is inflation. Higher inflation basically means paying more for the same goods and services that you used to afford at a lower cost.
It may reduce your purchasing power and lower your standard of living to afford basic goods. As prices of commodities increase, you may also need to switch to a simpler lifestyle and let go of luxuries.
Even more important is that it reduces the value of your money. As inflation rises, the value of the peso diminishes more quickly. So, if you just saved your money, you’re actually losing it. Why? It is because you just saved it from spending, but you lose its value because of high inflation. Things you can purchase from a P100 bill that you saved years ago will no longer be the same if you spend it today.
Therefore, you might think twice about depositing your hard-earned money in your banks and saving it for the long term. Bank accounts would never give you rates that outpace inflation. Fitz Villafuerte, a Registered Financial Planner (RFP), blogger, and contributor on Sun Life’s website, recommends that “your savings account should be enough to cover at most, two years’ worth of your expenses”. Beyond this amount, it is best to put your money on investments.
About the writer:
Frederick John Santos. A former media practitioner: he is a previous Social Media News Writer on an AM Radio Station. Now with MPT South, he writes to give information and updates of MPTS’ toll roads to its motorists, stakeholders, and media.