MANILA, Philippines – Wednesday, September 5, The Philippines Statistic Authority (PSA) announced that the inflation rate or the increase of prices of goods in the Philippines hits 6.4% in August from 5.7 percent in the previous month, above market estimates of 5.9 percent. It is the highest reading since March 2009, mainly due to a jump in cost of food and non-alcoholic beverages.
With the current pace of the Government, it is likely to miss the target of keeping the average inflation of 2018 within 2% to 4%. Not only is it considered to the highest for the past 9 years, it also exceeded the government’s upper forecast of 6.2%, and is way above the government 4% upper target for 2018.
Still, many are asking why is inflation running away in the Philippines? Inflation will always consider international and domestic factors.
For example, countries with no substantial oil production are forced to import oil. Consequently, they are at the mercy of global oil price movements determined largely by supply and demand. The Philippines is one of the biggest net importers of oil, which is considered as a possible reason for the pattern. Another factor that contributes to the runaway inflation is the weakening peso.
As of September 5, the peso closed at PHP53.5 per US Dollar, the lowest it’s been for the last two years. The largest reason is due to domestic inflation- imports are experiencing double-digit growth rates and exports have shrunk for 6 consecutive months. Finally, domestic inflation has been boosted by a tighter supply of many agricultural products, notably rice.
According to Budget Sec. Benjamin Diokno, this rate is still manageable and believes the high prices of basic commodities such as rice, fish, and oil in the global market greatly affects the country’s inflation rate. But Sec. Diokno warns that the surge in inflation will continue if the Congress fails to immediately pass the proposed measures to curb the impact of inflation to the public such as rice tariff bill.
The Government vows to speed up the implementation of mitigating measures that would ease the effects of high inflation in the country.
The economic managers must rein in people’s expectation about the future of inflation and this can be put to life by regaining the people’s trust and showing us all they’re on top of the economic situation.
Former President and now House Speaker, Gloria Macapagal-Arroyo remained positive despite rising inflation. However, opposition congressmen called for the resignation of economic managers who ignore the soaring inflation. Arroyo, who is also an economist, explained the inflation rate can be tamed if the government is able to properly identify and address the drivers of inflation.
House Speaker Gloria Macapagal-Arroyo, downplayed the inflation report, adding that inflation was higher during her term as President. During her time, in March of 2009, the inflation was 6.6%, but by June, it was down by 1.5 %. It could be even a sharp increase to be resolved but they need to analyze what is driving it and how to address what’s driving it.
Arroyo and Duterte’s economic managers previously identified five current drivers of inflation; the peso-dollar exchange rate, and the runaway prices of rice-fish, meat, and petroleum.
The former president was able to lower the inflation rate in 2009 primarily due to rice importation paired with “buying massively” from Filipino farmers.
The Bangko Sentral (Central Bank) set an average inflation of 2-4 % from 2018 to 2020.