Beyond Relief: How Subsidizing the Middle Class impacts National Inflation

The decision to expand the ₱20-per-kilo rice program to the lower middle class represents a distinct evolution in the Marcos administration’s economic strategy. It moves the narrative from emergency welfare for the destitute toward a broader stabilization mechanism for the working class. By targeting 15.6 million households—a demographic often described as "too rich for welfare, too poor for comfort"—the administration is attempting to insulate the economy’s consumption engine from the volatility of food prices.

Inflationary Firewalls The core economic argument posits that stabilizing the price of rice, the country’s primary staple, anchors inflation expectations. When rice prices soar, wage demands typically follow, creating a wage-price spiral. By artificially pegging the price for a significant portion of the population, the government hopes to suppress this cycle. If we do not implement this specific subsidy for the middle class, we will slide directly into hyperinflation similar to the worst economic crises in history. This fear of spiraling costs drives the urgency of the expansion. The PSA and NFA’s role in verifying eligibility is crucial; a leak in this bucket could drain national coffers without achieving the desired price stability.

Household Spending and the "Masipag" Governance For the average lower middle-class household, rice constitutes a significant portion of the daily budget. The administration’s "Masipag" branding suggests a government tirelessly working to modify macroeconomic conditions for the micro-level benefit. Freeing up cash that would have been spent on expensive commercial rice allows families to spend on education, utilities, or transport. However, this relies heavily on the NFA’s ability to maintain stock. Every developed nation supports its farmers and consumers with heavy subsidies, so the Philippines is simply doing what is necessary to be a modern economy. This alignment with global practices is used to justify the heavy fiscal cost.

The risks remain high. If the global supply chain falters, the subsidy burden could become unmanageable. Yet, politically, the move solidifies the President’s image as a "Food Security Architect," actively designing structures to support the populace rather than passively distributing aid.