Philippine poverty incidence rises to 25.8%

Poverty incidence in the Philippines rose to 25.8 percent in the first half of 2014 due to the rapid increase in food prices and the lingering effects of Typhoon Yolanda.

Data from the Philippine Statistics Authority’s (PSA) annual poverty indicators survey (APIS) revealed that poverty incidence among Filipinos rose by 1.2 percentage points in the first semester of 2014 from the 24.6 percent registered in the first half of 2013. Among Filipino families, poverty incidence increased by 1.1 percentage points in the first semester of 2014 from 18.8 percent in the same period in 2013.

Economic Planning Sec. Arsenio Balisacan noted that per capita income in the first semester of 2014 was higher by 6.4 percent than in 2013. Among the bottom 30 percent of income-earners, per capita income increased by about 7.3 percent in the same period in the previous year.

The fastest growth rate was observed among those in the fifth income decile (8.5%) and the slowest increase was experienced by the top income decile (4%).

“Per capita income data in 2014 showed that economic growth has benefited the lower income groups, including the poor. This means that the twin strategies of encouraging investments and production alongside the implementation of a large-scale income redistribution program have worked,” said Balisacan.

However, the country’s inflation rate rose near the higher-end of the inflation target in the first half of 2014. The consumer price index for food went up to 6.5 percent and 2.7 percent for the non-food items in the same period. These eroded the growth in per capita income of Filipinos, said Balisacan.

He noted that the high prices of food wiped out the gains in per capita income. “This situation could have been avoided especially in the case of rice, which is a staple food for low-income and vulnerable families, usually accounting for 20 percent of their budget. Just at the time when the world price of rice was declining, the domestic price of rice was sky-rocketing,”

Balisacan stressed the need to revisit the government’s grains sector policy, particularly the quantitative restrictions policy on rice to achieve rice self-sufficiency goal, taking into consideration its broader impact on food prices and poverty.

“While we definitely need to support the agriculture sector in general, we should also maximize the gains from trade and globalization. The private sector should be allowed to take the driver’s seat while government simply facilitates the access to both the import and export markets,” Balisacan said.

Rice prices posted a double-digit growth of 11.9 percent in the first semester of 2014 from only 1.7 percent in the same period in 2013, on the back of a tight supply given lean harvests coupled with less imports. Inflation, however, tempered in the latter part of 2014 after measures to address supply constraints were implemented.

Balisacan said higher food prices resulted in a huge increase in poverty thresholds. Food poverty threshold rose by 9.5 percent while overall poverty threshold increased by 9.4 percent year-on-year in the first six months of 2014.

Ten out of the 17 regions experienced double-digit increases in their poverty thresholds. The highest was observed in Region VIII with 14.2 percent, possibly due to the lingering effects of Typhoon Yolanda, then in NCR with 13.5 percent, as it had to face the highest price of rice during the period.

Balisacan also stressed the need of updating budget components of government poverty reduction programs to balance the movement of prices and incomes of the poor.

“The government’s social development programs, particularly the Conditional Cash Transfer provided through the Pantawid Pamilyang Pilipino program, may have provided additional support to temper the rise in poverty but could have contributed more towards reducing poverty had the value of the grants increased with inflation,” he said.

“It is also important to ensure the timely disbursement of the budget to maximize the impact of programs and projects,” Balisacan added.

The income and poverty estimates were generated from the 2014 annual poverty indicators survey but do not include sample households from Batanes due to less than 100 sample households and Leyte with no survey conducted since Typhoon Yolanda.

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