Easing inflation boosts workers’ spending power — GlobalSource

THE expected decline in inflation in the coming months should help boost household spending and benefit the labor sector, GlobalSource Partners said.

“The expected decline in the inflation rate may be expected to boost private consumption, thus supporting strong GDP (gross domestic product) performance. This in turn can paint a more positive employment outlook,” GlobalSource Country Analysts Diwa C. Guinigundo and Wilhelmina C. Mañalac said in a report.

Headline inflation eased to 3.3% in August from 4.4% in July as food and transport cost growth decelerated. The August reading fell within the central bank’s 2-4% target for the year.

The Philippine economy grew by a higher-than-expected 6.3% in the second quarter, as government spending and investment offset weak consumption.

Household consumption refers to purchases made by households to meet their basic needs. It weakened to 4.6% in the second quarter from 5.5% a year earlier.

Despite strong growth in the second quarter, GlobalSource analysts noted that labor indicators remained weak.

Unemployment rose to a one-year high of 4.7% in July as new graduates entered the workforce, the Philippine Statistics Authority said last week.

This translated to 2.38 million unemployed individuals, against 2.29 million last year. This was also 46.6% higher than the 1.62 million jobless a month prior.

GlobalSource noted any increase in the jobless rate still points to “economic disenfranchisement.”

“Any percentage increase in the unemployment rate means economic disenfranchisement of those who failed to land a job. The challenge of high incidence of poverty remains in the Philippines.”

The Trabaho Para sa Bayan (TPB) Plan and the passage of the Konektadong Pinoy bill are expected to “address structural issues in the country’s quality of economic growth,” the analysts said.

The TPB is a masterplan seeking to help upskill workers and link them to job opportunities. It is expected to be ready by November, the National Economic and Development Authority has said.

The Konektadong Pinoy bill aims to improve internet access in underserved areas. The bill remains in committee. — Beatriz Marie D. Cruz