What does inflation rate mean to Juan de la Cruz?
Economist today hammered us with severe economic forecasts, specifically on a projected double digit inflation rate by the end of 2018 and as usual taking on annually. Oftentimes we take news item like this for granted, only to howl with protests once the effects are felt.
For the below average and average earners, what does inflation rate mean? It is a persistent and substantial rise in prices of goods and services that decreases the purchasing value of peso.
To simplify more, let me bring back your minds to the last time that one can have a chicken barbeque with rice and soft drink that cost only P1.75.
What period of time was the minica PU (public utility) vehicles lording over the streets of Davao City with P5.00 rides? Now, the moment you hail a taxi and just sit on it, it will cost P40, and only this time of the year that a normal P61 ride has gone up to P85.
Ten years ago, a shopping spree of P1,000 for basic grocery items would last between three weeks to one month for a family of five. Now the same budget is good for only four days at most.
This phenomenon called inflation started when the world economic giants deviated from the “gold standard” in the determination of currency exchange rate, and currency supply in the 1970s introducing fiat money.
In 1976, the gold standard officially died, and the Philippine Peso started its free fall in the foreign exchange market. From P2 in 1960s, it became P8 in 1980. Today, it is hovering at P53 to one US dollar.
What the economic masters could do is to increase the volume of currency circulation to safeguard from abrupt inflation, although the effect would be the same eventually. Because the more money in circulation the higher the inflation rate becomes, as the intrinsic value of money goes down over time.
For the below average and average earners, what does inflation rate mean? It is a persistent and substantial rise in prices of goods and services that decreases the purchasing value of peso. DANNY ABRIGO