NSCB - 2008 Factsheet - Recent Transport Fare Hike Pushes Household Expenditures Up by 0.26%

Recent Transport Fare Hike Pushes Household Expenditures Up by 0.26%
(FS-200808-ES1-01, posted 13 August 2008)

Last month, the Land Transportation Franchising and Regulatory Board (LTFRB) announced the minimum fare hike for jeepneys, buses and taxicabs. This is the second fare hike after the provisional increase the LTFRB granted last May 2008 (see Table 1 below).

Table 1. Fare Adjustments

Mode of transport	As of May 31, 2008		As of July 11, 2008
Mode of transport	min. fare *	addt'l **	min. fare *	addt'l **
Jeepney	8.00	1.25	8.50	1.50
Taxicabs ***	30.00	2.50	40.00	2.50
Buses
Ordinary	9.00	1.75	10.00	1.95
Air-conditioned	11.50	1.75	12.00	2.35

* For jeepneys, minimum fare is for the first four kilometers; Buses minimum fare is for the first five kilometers
** addition to the fare per succeeding kilometer
*** There will be no increase in the flag-down rate nor the waiting time; the increase is merely an addition to the total taxi fare.

The fare hike is the result of the soaring diesel prices, brought about by the increasing crude oil prices in the international market. The average retail price of diesel oil is currently P57.44 per liter¹.

Although Malacañang approved the recent fare hike petition, the Pinag-isang Samahan ng Tsuper at Opereytor Nationwide (Piston) said it wanted a P4 to P5 increase in fare while the Federation of Jeepney Drivers and Operators (Fejodap) sought a P2 fare increase.

The National Statistical Coordination Board (NSCB) conducted a Price Cost Analysis using the 2000 Input-Output Tables to analyze the effect of the recent fare hike on the average prices of goods and services, household expenditures and the cost of production, as well as to study the effect if there will be a P2, P4 and P5 increase in jeepney fare, as requested by the various operators.

Based on NSCB computations, the recent fare hike will result to an increase of 0.23 percent in the average prices of goods and commodities. Household expenditures will rise by 0.26 percent of which 0.11 percent will come from jeepney and tricycle fares, 0.08 percent from bus fares, 0.03 percent from trade services and 0.04 percent from all other goods and services. Hypothetically, this means that if a family of five living in the National Capital Region (NCR) is spending an average of P337 a day² before the July 11 increase, they will need an additional amount of P0.88 each day, on top of normal inflation. Cost of production will increase by 0.16 percent of which 0.11 percent will come from transportation operation, 0.02 percent from trade services and 0.03 from all other activities.

Comparing the different scenarios proposed by the operators, a P2 increase in fare will increase average prices of goods and services by 0.29 percent, household expenditures by 0.61 percent and cost of production by 0.33 percent.

The second scenario of a P4 jeepney fare hike will increase average prices of goods and services by 0.37 percent, household expenditures by 1.08 percent and cost of production by 0.56 percent.

Lastly, the proposed P5 increase in jeepney fare will increase average cost of goods and services by 0.41 percent, household expenditures by 1.31 percent and cost of production by 0.67 percent.

¹ Oil Price Monitor, as of July 29, 2008, www.doe.gov.ph

² Special computation of the 2008 Daily Poverty Threshold for NCR made by the NSCB Technical Staff using June 2008 price data from NSO and BAS.


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