Look real hard to find ways to stop rising prices

INFLATION reached a nine-year high of 6.4 percent in August from 5.7 percent in July, the Philippine Statistics Authority (PSA) reported last Wednesday, as the prices of rice, fish, and other food products soared in markets all over the country.

The Bangko Sentral ng Pilipinas (BSP) headed by Gov. Nestor Espenilla, listed what appeared to be the causes of the rising prices:

• “Elevated oil prices continue to impact on transport and power prices.”

• “The peso (along with other currencies) are being adversely affected by emerging market uncertainties and a strong US dollar.”

• “Strong domestic demand is making it too convenient for producers and traders to pass on higher costs and possibly more to consumers.”

The National Economic and Development Authority (NEDA), headed by Economic Planning Secretary Ernesto Pernia, said there is need for the agriculture sector to make a committed effort to boost output, along with government policy reform to bring down prices.

Palay production slowed down to 1.68 percent in the first half of the year, he noted, from 12.06 percent a year ago. The total inventory of the National Food Authority (NFA) is down to 19 million metric tons, 15 percent lower than the previous month.

These government statistics reflect conditions in the country’s markets which the common ordinary folk have long been suffering. The prices started rising this January, a steady rise that government appeared helpless to stop until the situation reached today’s 6.7 inflation rate, the highest in nine years.

The BSP sees the inflation rate as due to high world oil prices, the fall in peso value against the US dollar, a strong domestic demand, and traders passing on the high costs to consumers. The NEDA sees the low agricultural production.

No official has come forward to blame the new taxes included in the TRAIN law which took effect in January. It might have been a coincidence, but it was at this time that prices started rising steadily. TRAIN was touted as a reform measure because it lowered income tax rates, but it also imposed a number of new taxes, the most critical of which was a tariff on diesel and other fuels. This has led to higher transport costs and, therefore, costlier market goods.

All the factors cited by the BSP and NEDA undoubtedly contributed to the record inflation rate, but let us not ignore the effect of the new tax on fuel.

The growing call is now for the government to bring down prices. Secretary of Finance Carlos Dominguez III has proposed that the private sector now be allowed to import rice, a function now held by the National Food Authority. If the officials look hard enough — perhaps at the new taxes — they will find other ways to stop the soaring of consumer prices.