Inflation rate surge

DESPITE efforts by the country’s economic managers to rein in the rise in the inflation rate, the Philippine Statistics Authority reported that inflation surged to 6.4 percent in August. In July, the inflation rate was 5.7 percent. Which makes me, a noneconomist, wonder: what is the ceiling for this one?

Before I proceed, just a reminder. Those figures reflect reality and are not plucked from thin air. The rise in the prices of commodities is real, the lowering of the purchasing power of the peso more so. And since we are all in this together, it should be the concern of everybody, rich and poor and the sectors in between.

Again, I am not an economist but it is not difficult to see that the country’s economic managers consider the inflation rate surge as the sum of the rise in prices of specific goods like food and nonalcoholic beverages, alcoholic beverages and tobacco, furnishing and household equipment, etc. So the response was pulling down the prices of commodities that surged higher, thereby bringing the average up.

So we had that highly publicized and later derided move to import “galunggong,” once referred to as the poor man’s fish. If the galunggongs were imported from China, chances are most of these came from the West Philippine Sea, giving rise to the complaint that “ginisa tayo sa ating mantika.” Worse is the claim that these were probably laced with formalin.

What I understood there was that flooding the market with cheap galunggong would bring down the inflation rate figures for the category “food.”

Then there was Agriculture Secretary Manny Piñol’s other caper: encourage consumers to eat cheap weevil-infested rice or “bukbok” rice also as part of efforts to bring down the surging price of the commodity.

I found those acts superficial and merely skimming the surface of the inflation rate surge. Or should I say those dealt with the symptoms rather than the cause. There must be more compelling reasons for the hike in the inflation rate that when dealt with could more effectively push the inflation rate down.

On that, here’s what Cebu Chamber of Commerce and Industry president Antonio Chiu said: “Fortunately, the biggest factor affecting our inflation rate now is directly under the management and control of our government.” He was referring to the Department of Agriculture and the National Food Authority (NFA), apparently for the surge in the prices of rice and other food items.

Then he proceeded to point to what could be one of the roots of the problem: the situation is grossly mismanaged because of incompetence and corruption. To illustrate, he noted that the rise in rice prices is happening when rice is abundant in the world market.

At least one economic manager, Bangko Sentral ng Pilipinas (BSP) governor Nestor Espenilla, agreed partly to that although he used technical terms that even I could not readily understand. Two of those technical terms: “unfortunate confluence of cost-push factors” and “elevated oil prices.”

I understand the latter, although government has refused to acknowledge that the higher excise tax it imposed on oil products is inflationary.