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‘Sari-sari’ stores are closing

"Any sensible politician could benefit from listening to the sentiment on the ground."

Despite some assurances from the government’s economic managers that the worst is over inflation-wise, September came and delivered an even more punishing blow. The unabated surge in the prices of food items pushed inflation to another nine-year high at 6.7 percent, faster than the 6.4 percent recorded in August and the fastest since the 7.2-percent surge recorded in February 2009.

As with the previous months, food and non-alcoholic beverages, housing, water, power, gas and other fuels, and transport costs remain the top contributors to inflation, the Philippine Statistics Authority said. In particular, food and non-alcoholic beverages accounted for 38.34 percent, while housing, water, electricity, gas, and other fuels accounted for 22.4 percent.

The administration’s economic team, which includes the Departments of Finance, Budget and Management, and the National Economic Development Authority, attributed the surge to the disastrous impact Typhoon ‘‘Ompong’’ had on the prices of commodities, in particular “supply disruptions” in Ilocos, Cagayan, and the Cordillera Administrative Region. The “gloomy outlook on oil supply” and the winter-related pressure on demand are also factors, the PSA said.

“Thus, we urge a quick response to address this upside risk, including demand-side management strategies,” the team said.

While conspicuously downplayed in the briefings, it goes without saying that the government’s banner tax program, the Tax Reform for Inclusion and Acceleration Law—first implemented in January—remains a key factor in the continuing burden.

To cite, a Nielsen study found that while sales of the sugar-sweetened beverages are already weakening over the past years, the first onslaught of TRAIN in the early parts of 2018 did the portfolio no favors and accelerated the rate of decline following the implementation of increased excise taxes.

What is even more alarming is that the hardest-hit seem to be the neighborhood sari-sari stores, which collectively recorded the most pronounced dips in sales, with all sugar-taxed beverage categories, such as powdered juice and tea and carbonated soft drinks, posting an average decline of 8.7 percent year-on-year on February.

If, going by the estimates of the Philippine Association of Stores and Carinderia Owners, there are some 1.3-million sari-sari stores all over the country, and visited by 94 percent of consumers, such dip in sales could paint a vivid picture as to how exactly surging inflation is affecting things on the ground.

Because of a relatively low capital requirement and often hassle-free set-up, sari-sari stores represent accessible options for Filipinos who wish to get into retailing. But if as early as 2017, the number of sari-sari stores is already at a decline—falling by 1 percent year-on-year—the continuing surge in prices will not make things easier for the enterprising Filipino.

Are the other retail segments doing better? Interestingly, the initial impact of TRAIN on sugar-sweetened beverages was not as severely felt in supermarkets; in fact the rate of decline slowed down year-on-year, from 14.7 percent in February 2017 to 9.4 percent this year. Of the seven categories covered by the study, only energy drinks and ready-to-drink juices showed significant declines at 10.7 percent compared to the 3 percent the year before and 8.8 percent compared to 3.7 percent, respectively.

Even so, grocery stores—and drug stores—have more or less remained stagnant. The number of groceries remained the same in 2017 after a 2-percent uptick the year earlier. Drug stores rose by a measly 1 percent after a level 2016. It was only convenience stores that grew, at almost 4,300 as of the first quarter of 2018. This number, however, is minuscule compared to the over one-million sari-sari stores that dot practically every street in the archipelago.

As the Philippines is a consumption-driven economy, the broader picture is not any less dim. Untamed inflation, among other factors, had compelled the major multilateral organizations to lower their growth forecasts for the Philippines. Groups such as the World Bank, Asian Development Bank, and the International Monetary Fund slashed their projections by as much as 4 percent to the more modest mid-6 percent level.

“Inflation is higher than previously expected, and high inflation continues to erode the purchasing power of household and consumer confidence,” the ASEAN+3 Macroeconomic Research Office said, according to reports.

Consumer confidence contracted in the third quarter of 2018 for the first time since 2016, the group also noted. While the economy remains robust, the record inflation, it said, has serious implications in the government’s efforts to reduce poverty incidence.

It doesn’t help that there is a degree of passive insensitivity in the pronouncements of some government officials. Bangko Sentral ng Pilipinas assistant governor Restituto Cruz, for instance, had dismissed the downtrends as “growing pains” as the economy “moves to a higher plane of growth.”

The assurances, even if they make economic sense, are hardly comforting for the majority of Filipinos who feel the brunt of inflation every single time they troop to the sari-sari store or the market. With some forecasts expecting inflation to peak at 7.4 percent in December, there is a limit to the vaunted patience of Filipinos.

What’s necessary are immediate, tangible measures. Safety nets. This includes the possible suspension of excise taxes on fuels in case global oil prices average $80 a barrel for three straight months, effectively suspending a provision in the TRAIN Law. Citing lost revenues, the Department of Finance predictably opposes this, batting instead for the fast-tracking of the monthly unconditional cash transfer and fuel subsidy vouchers.

Whatever it is, opinion polls consistently reveal that a majority of Filipinos get a sense of the economy not from jargon-laden reports in the business pages but in their day-to-day struggle making ends meet. It’s a task that is getting increasingly harder these days. With the 2019 elections just around the corner, any sensible politician could benefit from listening to the sentiment on the ground, reflected in something as seemingly innocent as a neighborhood sari-sari store.

Topics: Economy , International Monetary Fund , World Bank , Asian Development Bank , National Economic Development Authority
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