Inflation hits 5-year high
Price hike concerns continue as inflation last month rose 4.6 percent, staying at its highest level in over five years, although slower than expected.
The May inflation was up from 4.5 percent in April, mainly driven by rise in alcoholic beverages, tobacco and transportation costs.
Consequently, consumers are feeling the brunt by high consumer prices.
Cebuano economist Fernando Fajardo asserted the poor are the most affected.
"Prices in food and nonalcoholic beverages rose by 5.7 percent. This is bad because it greatly hurts the poor who spend up to half of their income on them," the economics professor told The FREEMAN yesterday.
He said the faster rise in transport costs by 6.2% is also hurting consumers.
"Again, this is bad because of its multiplier effects on many things that are moved like the transport of goods from the production side to the market," the economist explained further.
While the uptick in inflation was slower than expected last month, Fajardo said price pressure concerns remain.
"It is also the highest so far since November 2011," he noted.
The data released by the Philippine Statistics Authority yesterday showed that price increase quickened year-onyear for alcoholic beverages and tobacco, transportation and household equipment, while it slowed for food and nonalcoholic beverages.
The inflation outlook continues to be a concern and critics have blamed the rising prices to the Tax Reform for Acceleration and Inclusion (TRAIN) law which imposes higher taxes on fuel and sweetened beverage products.
Inflation averaged 4.1percent in the first five months of the year and is still above the Bangko Sentral ng Pilipinas' 2 to 4% target for the year.
In a joint statement yesterday, the departments of Finance and Budget and Management, and the National Economic and Development Authority said the increase in the international oil prices beyond the programmed level of 60 dollars per barrel contributed 0.5 percentage points to the overall inflation rate in May 2018.
"This means that for every additional peso due to inflation, one pays 11 centavos more. Adding other external and domestic factors together, their joint contribution to the inflation rate is 0.7 percentage points. This means that for every additional peso due to inflation, one pays 15 centavos more. Compared to these, the effect of excise taxes on petroleum, sweetened beverages, and tobacco under the Tax Reform for Acceleration and Inclusion law, or TRAIN, remains at 0.4 percentage points, the same as in April 2018. That amounts to 9 centavos for every additional peso due to inflation," they said.
"Staying the course will not always be easy, but we owe it to our people, our children, and future generations. We know that we are going through a challenging period. The government is closely monitoring and taking steps to address the difficulties experienced by Filipino families today arising from higher prices," the joint statement further read.
Major oil exporting countries are already discussing the possibility of increasing production.
"When they do this, we know this will bring down the cost of our oil imports and prices at the pump. In the meantime, the Department of Energy (DOE) has already made arrangements with oil companies to provide discounts to public utility vehicles and the Department of Transportation is finalizing guidelines for fuel subsidies under the TRAIN law. DOE is also exploring whether we can import oil from non-OPEC countries."
The country is also expecting large tranches of rice imports to arrive starting this month.
"We are of one mind that one of the best ways to address high food prices is for Congress to ensure urgent passage of the Rice Tariffication Act. The Bangko Sentral ng Pilipinas estimates that this will reduce 2018 inflation by around 0.4 percentage points if implemented in the third quarter. More importantly, we estimate that this policy shift will drive down the price of rice by up to 7 pesos per kilo for the Filipino family," the economic managers further said.