Davao City businesses grapple with soaring inflation; Oct. rate at 10.4%

BUSINESSES in Davao City, one of the major commercial hubs in southern Philippines, are worried that local inflation will hold back ongoing recovery from the coronavirus pandemic with the October rate at 10.4%, higher than the countrys 7.7% and Davao Regions 9.8%. 

An official of the Davao City Chamber of Commerce and Industry, Inc.  (DCCCII) said the business sector is grappling with the challenge of keeping sales growth amid soaring prices.   

Based on my discussions (with the business sector), I think inflation is a big concern in Davao City because the cost is high, they are forced to raise prices, and when they raise prices, fewer people can afford,John Carlo B. Tria, DCCCII past president and current vice president for trade and commerce, said in an interview with the media last week.   

Davao Citys two-digit Oct. inflation rate was higher by 0.5 percentage points compared to Septembers 9.9, and a major acceleration from 2.8% in the Oct. 2021, based on Philippine Statistics Authority data.    

For example when certain input costs in a restaurant go up, that will be passed on to the consumer, no choice but to raise prices. When prices increase and your customers cannot afford to buy the same, that might mean a lower volume now of sales,Mr. Tria said in mixed English and Visayan.    

Among the top sources of the upward trend in inflation are food and non-alcoholic beverages at 13.9% and transportation at 18.4%.  

Early in 2022, a lot of the economists said it (soaring inflation) would just be transitional because people were on revenge spending and demand was up,Mr. Tria said.   

However, he added, there are other continued contributing factors such as the high cost of logistics and climate-related challenges that decrease harvest.  

How to lower inflation is going to be the biggest challenge,he said.   

The 9.8% inflation rate in Davao Region, which is composed of five provinces plus the city, was the highest among the countrys 17 regions.  

Meanwhile, the information and communications technology (ICT) sector remains a bright spot for the city with employment seen to double in the next five years.   

Councilor Bernard E. Al-Ag, chair of the Davao City council committee on trade, commerce, and industry, said last weeks two-day Innovation Summit 2022 was expected to benefit mostly the young working population, which already comprise most of the current 70,000 ICT workers in the city.  

We are targeting that by 2028 our ICT workers will reach 150,000, that is why the city government is supporting 100% the summit because this has the potential to give more jobs and to bring more businesses to the city,Mr. Al-Ag said in an interview with the state-owned Philippine Information Agency.   

The event included forums on industry developments, business-to-business meetings, innovator pitches, and trainings for ICT workers.   

Among the participants were Chinese companies such as Huawei, China Telecom, China Comservice, and Fiber Home that are looking to grow their operations in the city and the rest of the country.   

“These companies are already operating in Davao City, in Mindanao and in the Philippines. These are some of the bilateral cooperations that we have between two governments,” Davao City-based Chinese Consul General Li Lin said in an interview.   

Mr. Lin said connectivity is one of the key factors in economic growth, especially for micro, small, medium enterprises (MSMEs).   

“I think the internet coverage is very important to help in terms of accessibility to interact and get information. I think with better internet coverage and mobile service to the community, especially to hard-to-reach areas, I think this will benefit the economic growth and help the MSMEs to develop their businesses,he said. Maya M. Padillo