How does the inflation rate affect purchasing power, especially among low-income households?
Answer (2)
The inflation rate shows how fast the prices of goods and services are rising. As inflation increases, the purchasing power of money goes down—meaning people can buy less with the same amount of money. This has a stronger and more painful effect on low-income households who spend most of their income on basic needs.For example, a family earning ₱10,000 a month used to spend ₱5,000 on food. But if food prices rise by 10%, the same food will now cost ₱5,500. That extra ₱500 must come from other parts of their small budget—like transportation, school expenses, or even savings. For these families, every peso counts.In urban areas like Metro Manila, rising prices of rice, LPG, and jeepney fares hit minimum wage earners the hardest. In rural areas, even if some food is grown at home, the prices of fuel, fertilizers, and medicines still increase living costs.How Rising Inflation Rates Affect FamiliesBuy less nutritious food, leading to malnutritionWithdraw children from school to save moneyDelay medical treatment due to high costsThis reduces not only the quality of life but also the long-term development of the family and community.Middle-class families may adjust by cutting leisure spending or looking for side jobs. But poor families have fewer options and are often pushed into debt just to survive.The inflation rate also affects wages. If wages do not increase at the same rate as inflation, the real income of workers falls. For example, if inflation is 6% but salaries only go up 3%, then workers are effectively earning less.That’s why monitoring inflation and adjusting wages are key roles for the government and employers. Programs like targeted subsidies, free school meals, or fare discounts help reduce the impact of inflation on vulnerable groups.In summary, inflation lowers the buying power of money, and low-income households feel this most severely. Protecting them from rapid price increases is essential for promoting fairness and social stability.
Inflation reduces purchasing power because as prices rise, the same amount of money buys fewer goods and services. Low-income households are especially affected since they spend a larger portion of their income on essentials like food and housing, so inflation can strain their budgets more and reduce their overall living standards.
