FILIPINOS are expected to have a Merrier Christmas this year as lockdowns are eased, but they will most certainly be greeted by high commodity prices, economists said.
The shipping crisis and the surge in domestic demand would likely account for the more expensive Christmas, according to them.
Former University of the Philippines School of Economics Dean Ramon L. Clarete told the BusinessMirror that delayed shipments caused by global logistics concerns would likely increase the price of Christmas goods, especially this month.
“[With] delayed shipments of Christmas goods, even food…we would therefore expect some shortages and maybe our prices may slightly go up,” Clarete told this newspaper.
Christmas goods, Clarete said, should have been shipped two months to a month before December. But these goods could encounter delays due to existing bottlenecks in shipping to several countries—increasing their cost.
And this is not likely to happen this December, he said. “Higher logistics costs [may continue the next] one or two years [as the world comes] out of the global economic crisis. It will take a while for industries [to adjust]. [This] may be a reality we have to face in the next two years.”
For Monetary Board member V. Bruce J. Tolentino, Christmas for Filipinos this year will be more expensive if the current global shipping concerns—lack of vessels and containers—persist.
The price increase could be felt in meat and wheat-based products such as pancit, bread, ham, since the raw materials for these items are imported, Tolentino added.
“If shipping concerns continue, we are going to have a more expensive Christmas Noche Buena especially for those commodities which come from meat products and wheat,” he told the BusinessMirror.
“These items come on ocean transport from the west coast and the port of Los Angeles right now is clogged. There is also a lack of workers due to Covid-19 but the more serious one is containers, they are really more expensive today,” he added.
Economist Ramon Clarete pointed out that the global shipping problems have caused delays in the arrival of imported goods and food products, resulting in tighter supply and higher prices.
“Christmas goods must have been shipped two months ago, not one month ago because of the bottlenecks in shipping in many countries. So, we would therefore expect some shortages and maybe our prices slightly going up this Christmas,” he said.
“If you have shortages, price increases should be expected,” he added.
Clarete thinks the country must “double” its work in producing products that can be sourced locally, particularly in the case of pork, marred by shortages due to African swine fever (ASF). This way, he explained, the country will not be too dependent on imports, mitigating the impact of higher shipping costs.
“For products we can produce locally, we should double our work to build up the local capability. For example in pork, there are things we can do such as have more breeders available to local producers,” he said.
“The logistics problem will persist for another year or two. This is a reality we have to face in the next two years,” he added.
Domestic reopening
Along with these concerns is the reopening of the domestic economy and greater consumer confidence, as seen in people filling up the once empty malls and restaurants.
Philippine Institute for Development Studies (PIDS) Senior Research Fellow Roehlano M. Briones said many restaurants have started opening in time for the holidays, and a natural consequence of this is higher prices.
Briones told the BusinessMirror this will also translate to the prices of specific commodities like rice which is the country’s staple.
“I expect the price pressures to start this December and we’ll feel more of it by January. It could be attenuated now because it’s harvest season or tailend of the harvest season but yeah, once harvest ends, and we’re now drawing down our stocks, that’s when we’ll start feeling it,” Briones explained, partly in Filipino.
The confidence to spend, Ateneo Center for Economic Research and Development (ACERD) Associate Director Ser Percival K. Peña-Reyes said, is driven by the decline in Covid-19 cases.
Peña-Reyes expects that as the economy moves to a lower alert level, “spending will be increasingly intense.” This may be what is referred to as “revenge spending” which is nothing more than pent-up demand.
This is common given that the pandemic prevented people from spending and now that the economy has become more open, Filipinos would have more confidence to spend.
He said in savings, which is essentially future consumption, there is “delayed gratification.” This can explain the sudden increase in spending in the country.
Image courtesy of Bernard Testa
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