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The subsidies and cash assistance for low-income Filipino families under the 2023 national budget, according to a party-list lawmaker, will help lessen the impact of inflation, which increased to its quickest rate in 14 years in December.

Rep. Bernadette Herrera of the Bagong Henerasyon Party list urged the responsible government organizations to distribute the majority of this money before the spending moratorium that would accompany the Barangay and Sangguniang Kabataan (SK) elections in October of this year.

Inflation will be tempered by the release of these monies, according to Herrera, not just for low-income and destitute people but also for the small businesses they work for and interact with.

The average inflation rate for last year was 5.8 percent, much beyond the government’s target range of 2 to 4 percent. Last December’s inflation rate fell within the Bangko Sentral ng Pilipinas’ (BSP) 7.8 to 8.6 percent projection for the month.

Herrera forewarned that “elevated inflation” will reduce the 2023 budget’s overall purchasing power.

According to her, the newly adopted 2023 budget will lose nearly 7% of its purchasing power, or around PHP368 billion, if inflation remains high and exceeds 7% monthly.

“The PHP368 billion allocated for the national budget is not being barya. Malaking bagay iyan dahil sa tantya ng BSP, mananatiling mataas ang inflation sa kabuuan ng 2023 (PHP368 billion is not little change, which is the amount of purchasing power to be lost from the government’s coffers. This is significant since, according to projections from the BSP, inflation would be high throughout the full year 2023),” she continued.

The 2023 national budget, according to the Department of Budget and Management (DBM), includes more than PHP200 billion in “ayuda” in the form of cash transfers and subsidy programs.

According to the central bank, “upside risks continue to dominate the inflation projection through 2023 while being largely balanced in 2024,” according to Herrera.

According to BSP, rising global food prices caused by high fertilizer costs and supply chain restrictions are the key cause of predicted upside risks to inflation throughout the policy horizon.

On the domestic front, trade restrictions, rising sugar costs, weather-related price increases for fruits and vegetables, pending requests for transportation ticket increases, as well as probable pay changes in 2023, could all cause inflation to rise. The biggest downside risk to the projection, according to the BSP, continues to be the effects of a weaker-than-expected global economic recovery.

According to the Philippine Statistics Authority (PSA), the annual increases in food and energy prices are primarily to blame for the latest rate of inflation growth, which is the fastest since November 2008.

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