PhilFAQS

The cost of living and ordinary family purchasing information is always a popular subject here at PhilFAQS.  My friend Bob just posted an article wondering "if the worst was over" regarding the exchange rate between the US dollar and the Philippine Peso.

In some respects this last year has been rather tight for us … when I had $1,000 USD sent from my US account to my Peso account in January of 2007, I would get about PhP 50,000.  Last time I transferred $1,000 it was more like PhP 42,000.   That difference is more than the cost of my rent, my water bill and my cable service for a month combined, so it certainly has made a difference.  As I write this, Yahoo Finance is showing 43.215 Pesos per US Dollar, so it certainly seems to be headed in the right direction for a person who earns in dollars.

Yet back in 1999, on my first visit to the Philippines, the Peso was about 44 to the dollar, so in some ways the more things change, the more they stay the same.

What really has changed a lot though is food.  Americans, especially those who don’t travel much, have no idea, really, how blessed the US is with cheap food prices.  In almost every other country of the world, people pay a significantly higher percentage of their income on food … and Filipinos are no exception.  Rice, the single most basic commodity in the Philippines has doubled for some varieties, and judging by my last trip to the supermarket, food prices are not going to moderate any time soon.  In comparison to many countries, though, the Philippines is still a great bargain.  The prestigious British news agency/magazine, "The Economist" has been doing a cute but very practical "apples to apples" price report for more than 10 years now, called the "Big Mac Index".  Since McDonald’s Big Mac burger is essentially the same product sold in over 100 countries, it’s very practical to look at the cost in each country in local currency and also what the burger would cost in dollars at the current rate.  based on that index the Philippines has one of the strongest purchasing power per local currency unit in the world … only China, Thailand and one or two others can equal what it costs for a burger … more than 50% less in US Dollar terms than the exact same product in the US (by the way, don’t order a Big Mac in Reykjavik, Iceland currency has less than half the purchasing power).  I don’t eat many Big Mac’s, though (in the Philippines rice and fried chicken are the big sellers in "Makko".  Food still seems expensive to me.

I can’t close out this article, though, without a reference to fuel prices.  Just a few weeks ago I was paying 38 PhP for diesel, yesterday most places were well over 42 PhP to the liter, that’s about $3.82 USD per gallon at yesterday’s exchange rate.  gasoline is going for about 45 PhP per liter as I write this (21 May 2008), so that translates to about $4.10 USD/US gallon.  Thank goodness I only use about 1 tank per month … I’d hate to be operating a taxi or leasing out a jeepney … government-controlled fares (ever notice how many Americans want ‘the Government to "do something" about prices … come here and you’ll get a real lesson in socialist economics) make it pretty darn hard for these guys to earn a living.

I really must do something about buying a bicycle ;-)  With the pesos per dollar, the price per liter and my waistline all rising over 40, it’s time to make a change!

Related posts:

1. Philippine Forex — Will the Dollar Stay Strong?
2. Any Doubt On Which Way This Chart Is Going?
3. Costs Are Relative — Cost of a Gallon of Gas, etc.
4. ForEx Is Not Just A Trader’s Game
5. What Things Cost — Department Store 1

Related posts brought to you by Yet Another Related Posts Plugin.