Cost of Living in the Philippines – Update

How Much Does it Cost…I’ll Buy it!

How much does it cost? I’ll buy it. The time is all we’ve lost. I’ll try it”….  While I’m sure Jonathan Edwards didn’t write this song about living in the Philippines, the lyrics do project forth the idea of possibly living somewhere less intrusive and with more liberty. It’s become painfully obvious to many westerners that money is getting tighter, life is getting tougher, regulations have a strangle hold on everybody, and getting old through it all is a bitch!  If you haven’t read my post Planning a Move to the Philippines, now might be a good time in order to help gain an understanding of some of the complexities involved and how it can relate to the income or funds needed to live here.

It’s been some time since I published anything about the cost of living here in the Philippines. There are many questions that arise through the social media circles about how much money it takes to live in the Philippines, and while the question itself might be simple and straightforward, the answers are as varied and complex as the planets in our solar system. I have written before that living here is not a one-size-fits-all prescription, and the costs involved are determined by many factors.

Digest This!

Big Mac Index

Big Mac Index

The Big Mac Index (an interactive currency-comparison tool) was introduced by The Economist in 1986 as a lighthearted guide to help one understand the valuation levels of currencies, based on the theory of purchasing-power parity (PPP) which is the notion that over the long-term, rates should move towards equalization of an identical basket of goods and services (in this case, a McDonald’s Big Mac) in any two countries. (At the end of this article you will find a link to the Big Mac Index.) I’ve personally always compared the price of regular beers…it works well also. This index can help one understand the cost differences between where they are coming from and where they are going to. Of course this is a generality, but it seems to be a popular, yet simple way to determine differences in the basic costs of living.

When we first began building our Samar home here around 2004, the exchange rates were favorable to the USD and were better than P50/1USD. Back then we got a lot in return for our money. Since that time, as we all know, the bubble burst, the market crashed and the dollar tumbled and it has been a long slow recovery. Just before we left the U.S., (summer of 2013), the peso rate was near a 5 year low and has been on the upswing ever since. Before we made our move and, when we began assessing our future lifestyle, we based everything on the then, current exchange rates, about P41/1USD. What I am driving at here, is that planning is of paramount importance, and while there will always be factors that drive the cost of living upwards, exchange rates play an important role in one’s overall enjoyment and comfortability. One should always account for rates to deteriorate in order to be prepared for downturns. We did not and got lucky. Most recently, the USD has posted some strong gains against many foreign currencies and specifically the Philippine Peso and as of this writing, the rate is at P45.75/1USD. That is the best showing of the dollar’s strength in over 5 years. We are definitely not complaining.

Enter Inflation.

Peso to USD rate history

Peso to USD rate history (1yr)

While our purchasing power has increased along with the more favorable rates, we have remained pretty much on target and within our initial budget. As a result, have been able to actually save some money. With increased purchasing power comes more freedom to choose a wider variety of goods and services however, the one thing that seems to always take a bite out of our Big Mac is the cost of electricity. Last year at this time the cost of electricity (“generation charge”) was at P4.70 per kilowatt-hour (kwh) which was up from P3.92 p/kwh just 6 months prior. Last month the cost of electricity increased to P5.80 p/kwh. In summary, that is a 32% increase over 18 months.There are a gazillion other charges applied to our bill but I won’t get into those because it is the generation charge that seems to be the budget buster. Simply speaking, when you least expect it, there will be a budget buster that shows up. One good thing is that fuel prices have been low, running at about P49.00 per liter (or about $4.07 p/gal), down from over P61.00 per liter when we first arrived. I’m glad we drive a three-cylinder car!

In the Philippines, the annualized inflation rate in July eased to 0.8 percent, down from 1.2 percent one month earlier (June 2015). This is the lowest inflation rate figure since April 1987, as costs declined for transport and housing and utilities while prices of food and non-alcoholic beverages slowed even further. The forecast inflation rate for the upcoming months is expected to slump even further to a low of 0.25 percent by October of this year. Most all expats that live here in the Philippines will attest that prices on most things are reasonable to cheap (non-imported goods). When you looks at imported goods, foods, and luxury items, you can forget low prices. While they say that overall there has been low inflation in utility costs, but as far as electricity is concerned in the Calbayog City area…Not!  So, while the best prices remain on locally grown fruits, vegetables, poultry, meats, and fish, it is definitely the air-conditioning bill that will ruin your day…and your budget!

Here is a sample of current prices: (U$D prices based upon P45.50/$1 exchange)

Premium rice –         P47 p/kilo ($.47 p/lb)
Boneless pork –        P230 p/kilo ($2.29 p/lb)
Cut up chicken –       P150 p/kilo ($1.49 p/lb)
Fresh caught tuna –  P150-170 p/kilo ($1.49 – $1.71 p/lb)
One dozen eggs –     P72   ($1.58)
Fresh cabbage,
potatoes, carrots – P80 p/kilo ($1.76 p/lb)
San Miguel, 12oz –   P35 ($.77)
San Miguel, Grande P80 ($1.76)
Unleaded gas – ltr    P42-sari-sari price, P49-station price ($3.49/$4.07)
Diesel fuel – ltr         P39 ($3.24 p/gal)

1. The inflation rate in the Philippines is tabulated and reported by the National Statistics Office of Philippines.
2. Visit the Big Mac Index.

7 thoughts on “Cost of Living in the Philippines – Update

  1. Great article …..
    Hope you’ll doing great there….
    greetings from Houston, Tx

  2. Randy ya do realize that even at 5.80P ($0.13) that is about the average as back in the US ($0.12). In lovely Cambo land I am paying $0.21 per kilo. The one good thing here is that the cost is government controlled so everyone throughout pays the same and to change the rate takes governmental action – which in the Khmerland means it ain’t gonna happen very often. Could be worse the Aussies are at $0.30, Germans at $0.35 and Denmark at $0,41.

    • Jeff, that P5.8 p/kwh is just the generation charge. When you figure in all the other gazillion fees, our last bill works out to P11.70 p/kwh or about $0.26 overall, so I guess we can compare rather well. Here it is the generation charge alone that has increased so much and not the other miscellaneous fees. Soon thought I fear they will find a way to increase all those other superfluous fees.

    • Hi Jeff, actually the P5.30 is only the generation charge. When you add in all the superflouos charges, it comes up to P11.86 or about $.26 so we are right up there with the high payers in the west.

  3. Randy, a three-cylinder car, are you sure, I would swear that under the hood was at least 4 hamster wheels

    • Richie, yes 3 cylinders…one is missing! It is a Mitsubishi Mirage G4 made here in the Philippines. We get about 45-51mpg depending on city or highway driving.

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