Worth of P1 in 2018 now only 86 centavos in July 2022, says PSA

The purchasing power of the Philippine peso saw a decline in the past three years due to inflation or the rate of increase in the prices of consumer goods and services, the Philippine Statistics Authority (PSA) reported Friday.

At a press briefing, PSA chief and National Statistician Claire Dennis Mapa said the value of P1 in 2018 was equivalent to 86 centavos in July 2022.

This is lower than in June when P1 in 2018 was computed as only worth 87 centavos.

“Bumaba siya kasi siyempre tumaas ang inflation eh (It declined because inflation increased),” Mapa said.

Inflation clocked in at 6.4% in July, its fastest reading since October 2018 when inflation was recorded at 6.9%, amid the rise in the prices of food particularly fish, meat, and sugar as well as increase in land, sea, and air transport fares. 

The purchasing power of the Philippine peso is computed as 1 divided by the consumer price index, multiplied by 100.

Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said that the decrease in the purchasing power of the local currency “is largely a function of higher prices/inflation and the weaker peso exchange rate in recent months, thereby reflecting the reduction in the local currency’s purchasing power.”

Ricafort said the peso already depreciated against the US dollar by about 10% year-on-year and 8.4% since the start of 2022.

“Thus, these factors are mathematically consistent with the decline in the peso’s purchasing power recently,” the economist said.

In a separate statement, the National Economic and Development Authority (NEDA) said that the government is committed to ensuring food security and affordability, and reducing transport and logistics costs to arrest a further rise of inflation and protect the Filipino consumers.

The Bangko Sentral ng Pilipinas (BSP), likewise, said it is “prepared to take all necessary policy action to bring inflation toward a target-consistent path over the medium term and deliver on its primary mandate of price stability.” — RSJ, GMA News