NSCB - 2005 Factsheet - P2.00 Proposed Jeepney Fare Hike To Raise Cost of Household Expenditures By 0.6%

P2.00 Proposed Jeepney Fare Hike To Raise Cost of
Household Expenditures By 0.6%
(FS-200503-ES1-03, posted 19 March 2005)

With the continued rise in oil prices, transport groups are seeking a P2.00 hike in the minimum jeepney fare from P5.50 to P7.50, an increment of 36.4 percent. The last fare hike granted by the Land Transportation and Franchising Regulatory Board (LTFRB) was on June 12, 2004 when the minimum fare was raised from P4.00 to P5.50.

Since jeepney is one of the most popular means of transportation in the country, it is critical to examine the effect of such proposal in the life of Juan Dela Cruz.

NSCB computations using the Input – Output (IO) Model show that should the proposed P2.00 fare hike be approved, consumers will experience an increment of 0.6 percent in the cost of household expenditures. Hypothetically, this implies that if Juan’s family is now spending an average of P200 a day, he will need an additional P1.20 each day on top of the “normal” inflation.

The same study indicates that prices of goods and services would also increase by an average of 0.3 percent. On the other hand, cost of production will increase by 0.4 percent with wholesale and retail trade services expected to post the highest increase of 0.08 percent.

While the LTFRB is still reviewing the transport groups’ petition for a P2.00 fare increase, the latter is now considering to amend its earlier petition and will be asking for a P3.00 or 54.5 percent increase in the minimum jeepney fare from P5.50 to P8.50 if the price of diesel reaches P30 per liter. Should this materialize, prices will rise by 0.4 percent on the average, the cost of production will increase by 0.6 percent and the cost of household consumption expenditure will increase by 0.9 percent.

Effects of the P2 and P3 Increase in Minimum Jeepney Fare

Given that the petitioners have cited oil price increases as the primary reason for the proposed fare hike, the NSCB also studied the effects of the 14.4 percent average increase in prices of petroleum products from P21.21 per liter in June 2004 to P24.26 per liter as of March 6, 2005. NSCB computations reveal that the 14.4 percent average increase in prices of petroleum products will have the following effects: a) prices of goods and services will increase by an average of 1.1 percent with jeepney fare expected to increase by only 2.8 percent, significantly lower than the 34.4 percent and 54.5 percent increase that the transport groups are eyeing; and b) total cost of production and cost of household expenditures will inch up by 1.4 percent and 1.0 percent, respectively.

It should be noted that the NSCB computations were all based on the 1994 IO Tables. Since the IO is a static model, the results do not necessarily capture/reflect yet, structural changes that have happened over the years since 1994.

For inquiries, please contact:

Ms. Vivian R. Ilarina, Ms. Marianne P. Abanilla or Ms. Eileen P. Capilit
Tel. No. (632) 896-5372
E-mail addresses vr.ilarina@nscb.gov.ph, mp.abanilla@nscb.gov.ph and ep.capilit@nscb.gov.ph


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