You know, no matter how long you live somewhere, you can learn something new about the place at any time if you just keep your eyes and ears open. Something like this happened to me the other day. It’s something that I had observed for several years, but the light bulb never flipped on, and I didn’t put 2 and 2 together to come up with 4, if you know what I mean.
You see, Feyma and I have observed for years that inflation here in the Philippines is very high. Yet, every time that the government comes out with reports on the economy, inflation is relatively low. I never could really understand it, because it was very obvious that prices were spiraling, yet all reports on inflation didn’t seem to jive with real life. I never could figure out why.
Another thing that I have observed in the Philippines is the way that pricing his handled. Many times, instead of increasing the price on an item, they just keep the price the same, but make the size of the item smaller. For instance, you can tell when the economy is bad when you go eat at a restaurant. Maybe it’s a place where you go regularly, and you order the same items on a regular basis too. Now, when you go in the next time, the entree has suddenly become 25% smaller than it used to be! Maybe they changed to smaller plates, and the food followed suit. Funny thing is, the price is the same!
In the USA, where I come from, generally, if the price is going up on a certain item, they just raise the price. If the package size is 12 ounces and the price is $1.00, they might raise it to $1.19, but you still get 12 ounces. Here in the Philippines, most of the time they will cut the package size to 10 ounces for $1.00 (I am keeping the size and monetary units the same for the simplicity of the argument).
A few days ago, it was mid-afternoon, and I was a bit hungry, so I went to the cabinet and got a pack of peanuts. There is a certain type of peanuts that are spicy, which I really enjoy. I eat a small pack of these peanuts several times per week as a snack, so I am very familiar with the size of the pack, and the price too. When I grabbed the pack of peanuts from the cabinet, I thought to myself – “is this opened? It feels light.” Well, I checked it, and the pack was still sealed. I took a second look, and noticed something different. Along the bottom of the package, it is printed on the package “Net Weight 50 grams.” This was crossed out with a line, though, and a new weight was stamped on the pack in black ink “Net Weight 32 grams.” And, you know what, the price had gone up a bit too! So, I paid a higher price for LESS peanuts!
Finally, I put 2 and 2 together, and I think I came up with 4 as the answer. What I believe is that the government, when tabulating inflation is saying something like:
Small Pack Spicey Peanuts – was P20, now P21 – 5% inflation
What they don’t take into account is that you are getting 36% fewer peanuts in that same size package! So, instead of 5% inflation (based on price), you really have a much higher rate of inflation! Instead of paying P0.4 per gram, you are now paying P0.66 per gram! Although I have no proof that they are doing this, I really feel that this is what is happening. It is the only way that I can come up with to justify how prices rise fast, yet the inflation rate is given as low.
Yeah, it is still relatively cheap to live in the Philippines. But, it is changing, and not for the better. Learning the way things work here is important so that you can live your life appropriately.
What do you think?