Like many of Manny Pacquiao’s opponents, ordinary Filipinos are reeling against the ropes and just one solid punch away from being knocked out because of the nonstop rise in prices of food and other commodities. As prices continue to soar, more and more people join the ranks of the poor.

And there’s no end in site. Last June, inflation hit a 14-year high of 11.4%, a huge jump from last year’s 2.3%. It was the first double-digit rate since January 1999. The latest inflation figure exceeded the expectations of both the market and the BSP, so there’s really no telling when Juan dela Cruz will get a respite from this severe beating.

In the world market, oil prices continue its relentless march to record highs as it breached $147 per barrel on July 11. Runaway oil prices affect many nations but the Philippines is one of the hardest hit because all of its oil requirements are imported and we will always be at the mercy (or cruelty) of oil producers and speculators. The weekly increase in local pump prices will likely persist beyond August and there’s a big chance that fuel prices will reach P70 per liter before we start to hear Christmas carols.

There’s an old Filipino saying, “kapag maiksi ang kumot, matutong mamaluktot!” It will do us a lot of good if we follow this timeless adage. One positive thing that has come out of the escalating cost of commodities and services, is that many are now adhering to a more frugal lifestyle, particularly in the use of fuel and energy.

The LRT and MRT have suddenly become very popular, even to managers and executives. Despite the congestion, car owners are opting to use the passenger trains and rub elbows with others who are trying to stretch their hard-earned money to make ends meet. In the second quarter alone, the number of passengers using the MRT increased by more than 11% and is currently operating over its capacity during rush hour. You can even sleep without falling over because you’re packed like sardines.

Thousands have also shunned their cars in favor of buses, which can be cheaper by as much as 80%. If you live in Dasmarinas, Cavite which is 30 kilometers away from Metro Manila, you only pay P120 to P150 both ways if you take the bus going to Makati City and back. This compares to about P500 if you drive a car. Ask yourself if you are willing to pay P350 or more each day to travel comfortably. (Driving a car is hardly comfortable, it’s even stressful).

A welcome side-effect of the renewed popularity of mass public transport is the slight decongestion of our roads because of the lesser volume of private vehicles. The MMDA is adamant to accept this reasoning and insists that the improved traffic situation is a result of the many programs they have implemented. Maybe. But if you travel along Aguinaldo Highway in Cavite (which is outside MMDA’s jurisdiction), the improved flow of traffic is quite apparent and this is largely due to fewer vehicles on the road.

There’s also a keen interest among car buyers to go for vehicles with smaller engines that use less fuel. If you are planning to buy a car, avoid the gas-guzzling SUVs, unless you are extremely wealthy. You may look cool driving a handsome SUV but it will burn a hole in your pocket. Personally, I won’t feel cool if I bleed a lot of money every time I step on the gas.

Reducing your fuel expenses not only saves you precious pesos but it can actually lead to small reduction in prices as well. Oil companies admitted that the recent rollback in the price of gasoline (not diesel) was due to a slowing demand. That’s the law of supply and demand at work. Perhaps with more and more people leaving their cars at home and taking public transportation we will see more reduction in prices. (But first the government should improve our mass transport system)

For a change, let’s try to get the law of supply and demand on our side. If we reduce our consumption of food or go for cheaper alternatives, we may, in theory, force manufacturers of brand items to lower their prices. Once consumers start rushing back to their preferred brands because of reduced prices, manufactures of the cheaper alternatives may lower their prices in turn which hopefully will trigger a price war. Not likely, but I can dream, can’t I?

We can extend this principle of reduced consumption to utilities and leisure activities. If we use less electricity and limit our phone calls & texting, service providers may consider reducing rates. (Although in Meralco’s case, being a monopoly, lowering rates because of lesser demand is highly improbable).

True, this is a very simplistic way of trying to force a reduction in prices. There are many other factors to consider and there is a certain point where prices cannot go any lower regardless of how small the demand is. However, the main reason for reducing consumption is not to lower prices but to lower your expenses and ensure that you will have enough to cover your needs and allow you to set aside a little for your savings.

You want to stop the bleeding? Control your spending.

Posted: July 14, 2008
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