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MANILA, Philippines — Around 1.34 million Filipinos are at risk of falling into poverty due to high fuel prices stemming from the Middle East conflict, according to the Philippine Institute for Development Studies (PIDS).
The estimate is based on the analysis of the fuel price shock in the context of the Middle East conflict and discussed in the policy note titled “Who Suffers Most When Oil Prices Spike,” authored by PIDS senior research fellow Jose Ramon Albert.
Under the current scenario of oil at $105 per barrel, the PIDS said that the national poverty rate is expected to rise to 14.4 percent from the estimated 13.2 percent in 2025.
This would push 1.34 million Filipinos into poverty, mainly households that are just above the poverty line.
Under a scenario of oil price at $125 per barrel, PIDS estimates the national poverty rate rising to 15.3 percent.
In the most severe scenario of oil price reaching $145 per barrel, PIDS expects the poverty rate to worsen and reach 16.3 percent.
While all households experience roughly similar price impacts, PIDS said the price increases are likely to hurt the poor households more.
“Because poor households allocate over 57 percent of their spending to food and food supply chains are highly energy intensive, the transmission of cost increases through food prices disproportionately affects low-income households,” the PIDS said.
For the PIDS, targeted cash transfers can help reverse the poverty impacts.
“A fuel excise tax cut that reduces prices uniformly provides roughly four times more in absolute pesos to a rich household than to a poor household. Only targeted cash transfers can reverse this regressively by directing support specifically to those least able to absorb the loss,” the PIDS said.
In particular, it said that the proposed Suplementaryong Ayuda Para sa Apektadong Tahanan program is seen as the most equitable and cost-effective response.
By providing P6,000 per household as an additional support for existing program beneficiaries, adding those on waitlists and providing emergency transfers for persons with disabilities and minimum wage households, PIDS said the government could protect about 754,000 Filipinos from poverty.
If the crisis persists or deepens, it said that additional assistance to households is needed.
“The challenge is to implement the program before the shock fully manifests as deeper poverty,” PIDS said.
Meanwhile, Rep. Miro Quimbo, chairman of the House ways and means committee pointed out that the middle-class is unfortunately and ironically not covered by any kind of financial assistance or dole outs the government has been giving other sectors, and are drowned as well by soaring prices.
“They are one major crisis away from falling below the poverty line,” Quimbo stressed.
It has been established long ago that national government derives its taxes from the middle class or the salaried workers, whose monthly incomes are automatically deducted for purposes of taxation. About 85 percent of government funds are sourced from fixed-income earners.
In these hard times, Quimbo said the government should not forget those belonging to the middle class who usually are not covered by state-sponsored financial assistance.
“In our last two LEAD joint committee meetings, one reality has become unmistakable: the true threat of this energy crisis is its creeping impact on our domestic economy,” he said.
Cagayan de Oro City Rep. Rufus Rodriguez said 45 percent of the country’s population is classified as middle class, while only 1.5 percent belong to the rich class.
“The rest are considered poor,” he said.
Quimbo presented the 2023 Family Income and Expenditure Survey conducted by the Philippine Statistics Authority showing that the level of expenses of poor and rich households for diesel and gasoline were not so disparate.
The figures showed that 12.1 percent of the income of the poorest of the poor families went to diesel and gasoline, while 14.7 percent of the richest household’s earnings was spent on fuel.
Quimbo cited the survey to dispute a claim by Finance Undersecretary Karl Fermin Adriano that rich Filipinos comprising a small percentage of the population account for 50 percent to 85 percent of diesel and gasoline used by households.
This is the reason why diesel and gasoline were not covered by the recommendation of the administration’s UPLIFT committee on fuel excise tax suspension, which applied only to cooking gas and kerosene.
Quimbo informed his colleagues that upon the instructions of Speaker Faustino Dy III, his panel intends to focus on measures that would help “key sectors that directly shape the daily lives of our people
