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Govt think tank cites need for separate price index for the poor


MANILA, Philippines - The Philippine Institute for Development Studies (PIDS) said in a study released last week that there is a need to craft an indicator separate from the Consumer Price Index that "swiftly and accurately measures the impact of price changes specifically on the poor," whom official data show account for more than a third of the country’s population. According to the study on "Price Indices and Poverty," the increase in global food prices is pushing more people into poverty, making standard measures of inflation useless when gauging impact on this socially critical sector. "People who were poor before these price increases may now be on the verge of hunger and malnutrition," it added. The study argues that the CPI does not take into account that the impact of price changes varies across social classes due to their different consumption patterns. "The poor allocate almost 60% of their expenditure on food while the same proportion of total expenditure is spent on non-food [such as housing] among the non-poor," the study said, adding that this means the poor are more adversely affected by rising food prices than the upper classes. Hence, the study proposed an alternative price index for the poor (PIP) that more accurately reflects this social class’s consumption pattern. Emil T. Antonio Jr., president of the Center for Research and Communication and an associate professor of economics at the University of Asia and the Pacific, agreed that one of the more defining features of the PIP, which would set it apart from the CPI, is that "food would have the greatest weight since this is the biggest expenditure of the poor." National Statistical Coordination Board Director-General Romulo Virola said the PIP has already been discussed by agencies making up the Philippine Statistical System. "The idea, of course, makes a lot of sense," he said in a separate interview. "The issue is whether we have the resources to generate indices and related indicators regularly." — L. D. Desiderio, BusinessWorld
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