THE National Economic and Development Authority (NEDA) said keeping inflation in check will be crucial for households that are still suffering from their 2020 economic setbacks, noting that many employers remain incapable of raising wages even if required to do so by the boards regulating the minimum wage.
“Rising food prices need to be addressed, to prevent a wage-price spiral. Prices of food, as well as other basic goods and services, should remain affordable especially now that both households and firms are experiencing financial difficulties,” NEDA said in a report accompanying the National Income Accounts.
“This will temper demand for minimum wage hikes which may not be viable for businesses grappling with the impact of COVID-19,” it added.
Unions last month called for an increase in the minimum wage in the wake of rising prices of basic goods. The Department of Labor and Employment did not support their position because a “P700 or P750 national minimum wage cannot be handled by employers right now.”
Currently, the P537 daily minimum wage in Metro Manila is equivalent to P434 when adjusted for inflation while wages outside the capital range between P310 and P420, or P234-P333 on an inflation-adjusted basis.
Inflation rose to 3.5% in December after typhoon damage sustained by food-growing regions drove food prices higher. The 2020 inflation average was 2.6%, still within the central bank’s 2-4% target.
A BusinessWorld poll of 16 economists last week yielded a median forecast of 3.6% for January, within the 3.3-4.1% estimate by the Bangko Sentral ng Pilipinas. Inflation data for January will be released Friday.
In a separate report also published on its website, NEDA warned that prices could experience upward pressure this year due to the La Niña weather phenomenon, which is expected to last until March; the African Swine Fever outbreak restricting the pork supply; volatile global oil prices; and rising uncertainty over the new coronavirus strains, which raise the possibility of fresh lockdowns.
“For the near term, the government may consider fast-tracking the importation of food products in short supply by issuing certificates of necessity to compensate for the shortage in the local market and lost harvest due to the onslaught of typhoons in the latter part of 2020,” it said.
NEDA said smoothing out the supply chains, promoting online sales platforms, and urban agriculture projects will help minimize the upside risk to food prices.
The government is targeting economic growth of 6.5-7.5% this year.
NEDA has been pushing for quarantine restrictions to be eased further to help the economy recover faster. With the new coronavirus strain detected in the Philippines, it said the government may pursue the option of stricter monitoring and screening of incoming passengers to contain the disease and minimize the risk of further lockdowns.
It said transport bottlenecks should be addressed and warned against “unwarranted fare hikes” in order to keep the cost of transport fair for both commuters and operators. — Beatrice M. Laforga