Ep. 155: The Impact of Inflation in the Philippines

Welcome to the Secret Sauce of Outsourcing podcast that's dedicated to making you better at outsourcing to the Philippines. This is episode 155, the impact of inflation on your OFS in the Philippines. So the effects of inflation are all over the place. It's everywhere right now. While we were in Europe on our bike trip, we saw actual inflationary things multiple times. So one of the things like gas is eight to nine dollars a gallon in Europe. So in the US we're at like five dollars a gallon and we think, man, this is so expensive. They're at 8 to $9 a. Which it's a lot, right? Inflation's affecting everybody, including your ofs. So I got this email from Tiffany. Let me just read this to you. Hey, John, sorry to bother you on your holiday, but I got a rather urgent note from my VA today about their cost of living increases. I wonder if you're hearing about this from others. I'm wondering how extreme the effects could be. Are you planning a newsletter on this or a podcast? The insane inflation and cost of fuel is really affecting our business here in North America too. But we will be okay. So I asked my ofs, Julia about this. Like, how bad is inflation there? What's going on? Let me just tell you what Julia said. So Since January of 2022, the Philippines is experiencing inflation similar to the rest of the world especially. This has contributed to the rise of commodities. So rice, fruits, vegetables are higher because all of those things are transported with fuel. And fuel prices in the Philippines are very expensive. Electricity costs have gone up recently, but that's kind of a normal fluctuation. That's not super related to inflation. Electricity, some of it comes from fuel, but they buy their electric electricity from multiple sources like gas or renewables, wind or natural gas, coal. So historically electricity fluctuates according to demand, which in the summer months is significantly more. And so electricity right now is higher. Commuting costs have stayed relatively stable because the transportation board has. They regulate what different things can charge and they just recently allowed a 2 cent increase per jeepney ride given the rising fuel costs. But it's still, it's that even that still pretty, pretty reasonable. Buses and taxis are lobbying for fuel increase or for price increases. They haven't been given it yet, but it's coming. Ride shares, motorcycle trikes have not increased the fares yet, but that's probably coming also. So yes, they are experiencing inflation. It's not like super out of control there. Also, just so you know, the, the Filipino peso is really high right now compared to the dollar. So, like, I remember when I started outsourcing to The Philippines in 2005, it was 50 to 1. It was 50 Filipino pesos to $1. And then it dropped to 38 pesos to a dollar, which I didn't really know. I hadn't really paid attention to it. And all of a sudden my. My team members had like a 20% pay cut for no reason because I was paying them in US dollars. They finally told me something about it and I was like, oh, that sucks. Yeah, I'll send you more money and I'll pay attention to it now. Well, for the past few years it's been about 50 to 1, but the past couple months it's been like 56 to 1, which means they're actually getting significantly more money if you're sending them US dollars. So maybe the inflation hasn't been terrible for them because they're getting paid more without anything just because of the chain, the fluctuation in the foreign exchange, foreign currency. Exchan@onlinejobs ph we're feeling the inflation also. We have decided not to raise prices. We really just want people to hire someone in the Philippines and we want it to make it affordable. We want it to be reasonable for you so that when you're ready, you can pull the trigger and hire someone and you don't have to say, oh man, they just increased the cost again. So we just want to. We want you to hire someone and have a good experience doing it.