Philippines Cost Of Living

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Mr Lee
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I wonder if any of you might agree with me on this. I have been going back and forth to the Philippines for about 17 years now and the exchange back then to the US dollar was 20 to 1. So during our back and forth trips I have found that the cost of goods goes up when the exchange rate goes up for us, yet the opposite does not seem to apply. It seems once prices of items go up, other than when things are put on sale, prices stay up, so when I was getting about 48 to 1 the prices of most things were adjusted to that rate, and now that we are getting around 43 to 1, the prices have remained the same. What might happen if exchange rates go even lower? So my second question is, how do they set the prices on items? or is it just greed that keeps them up.

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Art2ro
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I agree 100% that greed is the culprit! SugarwareZ-034.gif

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Dave Hounddriver
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That's the vicious cycle of inflation. Costs go up due to the higher costs of imports. Then wages go up so the local people can afford to live, then when the cost of imports go down do you think they can give wage reductions to the workers?I have watched my wife's relatives over the last 4 years and they are always working and their wages are always going up. It may not seem like a lot but 4 years ago they were happy to make 120 pesos a day and now they are making triple that on a good day. Not just one guy but lots of them, (primarily in construction). I have noticed that the wages and demand for labor vary depending on location but the costs ain't going down anytime soon.

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No name
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When a country is experiencing inflation, other factors being equal, the currency value of that country will fall. The currency is worth less when goods cost more.Prices are not going up because the peso value is low, the peso value is low because prices are rising.Right now, and it very well may not last, the peso is loosing ground for two reasons. The Greece debt crises (which I do think will be temporary) and inflation. The Bangko Sentral ng Pilipinas has had to increase interest rates in its last three meetings because of inflation fears. Inflation fears usually mean the currency will fall.Inflation in the Philippines has never increased or decreased my spending power by $300 a month. No where even close. Maybe $10 a month. The rise and fall of the dollar has had that kind of effect on my spending power. It takes longer than a month to achieve that though. That big of a change takes a year or two.But it isn't the increased value of the dollar that is causing prices to rise, the rising prices in the Philippines will cause the dollar's value to rise.The Fed is meeting today, expected to confirm the end of quantitative easing aka the creation of money. If they don't, the dollars value will tumble like a rock. With the USA teetering on a second recession, the Fed will continue it if it will help. I don't know though, at some point the proper actions will start to have a negative impact. The creation of money was the correct thing to do for the USA economy since the Fed cannot cut interest rates, it shouldn't lower reserve requirements for banks to lend either. The Fed may be out of options and the executive and legislative branches have spent more than they have. So the US might not be able to do anything other than suffer for a while. BTW, a weak economy doesn't always mean the currency will fall. Stocks will suffer first and people will pull money out of stocks to invest in bonds which are safer. This pushes a currencies value up. In the short term though, what investors think the value of a currency will be is called "market sentiment" and is more important than the fundamentals in the economy. In the long term, fundamentals will prevail. US inflation is at under 2% again which means those of us with government pensions may see another year without a COLA. If that holds true it will the third year we see people complaining that the government is with holding on them. The law needs to be changed. We could see 1.9% for 10 years out to infinity and still see no COLA. Not likely to happen in the current environment.

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  • 2 weeks later...
Jim Sibbick
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Here is something for you to consider17 years ago, I was paying P12 for smbNow I pay P29 for smbup by 2.417 years ago, the exchange rate for Aussie dollars was P18 to aud $1Now it is P45 to aud $1up by 2.5SMB still costs the same in Aussie dollars as it did 17 years agoRegards: Jim

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