NEDA: Poverty worsened in 2014 due to Yolanda, food inflation

MANILA, Philippines - Poverty incidence among Filipino individuals and families went up in the first half of 2014 due to the rapid rise in food prices and the lingering effects of Typhoon Yolanda, the National Economic and Development Authority (NEDA) said Friday.

Citing data from the Philippine Statistics Authority's Annual Poverty Indicators Survey, NEDA said poverty incidence among Filipino individuals rose to 25.8 percent in the first semester of 2014 from the 24.6 percent registered in the first half of 2013.

Among Filipino families, poverty incidence also increased to 20 percent in the first six months of 2014 from 18.8 percent in the same period in 2013.

NEDA attributed the elevated poverty incidence to the rapid rise in food prices, particularly rice, which posted a growth of 11.9 percent in the first semester of 2014 from only 1.7 percent in the first half of 2013.

The agency added that higher food prices resulted in a huge increase in poverty thresholds. From January to June 2014, food poverty threshold rose by 9.5 percent year-on-year while overall poverty threshold increased by 9.4 percent.

Of the country's 17 regions, 10 experienced double-digit increases in their poverty thresholds, with the highest being observed in Eastern Visayas at 14.2 percent. The NEDA said this was possibly due to the effects of Yolanda, which devastated the region in November 2013.

Metro Manila had the second highest increase in poverty threshold with 13.5 percent as it had to face the highest price of rice in the first half of 2014.

NEDA: Rise of food prices negated benefits for the poor

Poverty incidence increased despite the higher per capita incomes recorded in the first six months of 2014. NEDA Director-General Arsenio Balisacan said per capita income in the said period 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 percent) and the slowest increase was experienced by the top income decile (4 percent).

"Per capita income data in 2014 show that economic growth has benefitted 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, who is also the socioeconomic planning secretary.

NEDA noted, however, that high prices eroded the growth in per capita income of Filipinos, with the country's inflation rate hovering near the higher-end of the inflation target in the first half of 2014. In the said period, the consumer price index for food went up to 6.5 percent and 2.7 percent for the non-food items.

"The very 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 skyrocketing," Balisacan said.

'Rice sector, CCT program need to be revisited'

NEDA pointed out that inflation tempered in the latter part of 2014 after measures to address supply constraints were implemented.

Despite this development, Balisacan called on the government to revisit its 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.

He also cited the need to update the 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," Balisacan said.

"It is also important to ensure the timely disbursement of the budget to maximize the impact of programs and projects," he added.