Elevated inflation not ‘a major crisis’— gov’t

Two of President Rodrigo R. Duterte’s economic managers insist that the Philippines is not in a major crisis despite the skyrocketing consumer prices stressing the inflation level is just slightly elevated against their target.

Finance Secretary Carlos G. Dominguez III and Budget Secretary Benjamin E. Diokno both explained yesterday that the 6.4 percent inflation in August should not cause panic, citing that the Philippines had much higher rates in the past administrations.

Dominguez and Diokno suggested that the public should look at inflation in a long-term perspective.

“You have to really take a long view, when you take a long view you will realize that we are the second lowest inflation of the administrations since Cory,” Dominguez told reporters, referring to former President Maria Corazon C. Aquino.

During term of the first Aquino administration, the country’s inflation averaged 10.5 percent and hit its highest level at 21.2 percent.

“Do you think it’s a major crisis or are you making it a major crisis? I’m telling you there is such a thing as perspective. It [inflation] may look bad but when you look at the history, it’s not that bad. [But] I’m not saying it’s not bad,” the finance chief said.

Dominguez also pointed out that prices of rice, the staple food of the 105 million Filipinos and a big contributor to inflation, accelerated by 14 percent year-on-year during the Arroyo administration, but now it is at only seven percent.

“We are not in a major crisis,” Dominguez declared. “It may be a serious problem for some people but for the nation in general it’s not a major crisis and besides I will explain to you later we have a lot of tools that are available to us.”

Earlier, the Duterte administration’s economic managers unveiled nine immediate reforms to reduce food prices. They also submitted to President Duterte a draft executive order that will remove administrative and non-tariff barriers on the importation of consumer items.

Based on Diokno’s estimates, inflation may decline by around by 2.4 percent once the government’s reforms to temper the significant increase in consumer prices are implemented.

Diokno reiterated that inflation is expected to peak this quarter before tapering off towards the latter part of the year, and then fall within the government’s target by next year.

For rice, the budget chief said that its retail prices are expected to decline in the coming weeks after the release of 4.6 million bags of the staple and the arrival of another two million bags before the end of September.

“Rice will flood the market and we are expecting harvest soon, so I think things will normalize,” Diokno said.

He also said that 6.4 percent rate cannot be described as “runaway inflation” as this could be construed as “no one is in control, it’s is like a runaway car without a driver.”

“Runaway inflation is associated with hyper inflation where even the central monetary authorities have no handle of what’s going on, so that’s an irresponsible statement,” Diokno said. “We had seen higher inflation in the past… during the time of Mr. Marcos the inflation rate was close to 50 percent.”

Asked what’s the term to call the current inflation situation in the country, Diokno reposted it is just “slightly elevated.”