Palace: Inflation, weak peso due to high demand

There is no need to worry about the record-high inflation and the weak peso as they are just effects of a strong demand as well as more imports of materials for the government’s infrastructure program, Malacañang said yesterday.

The Philippines’ headline inflation reached 6.4 percent last month, the highest in nine years. It was higher than the 2.6 percent posted in August last year and the 5.7 percent recorded last July.

The Philippine peso, meanwhile, hit a new low this week, falling to P53.80 to a dollar last Wednesday, the lowest in almost 13 years. The depreciation has been attributed to the higher-than-expected August inflation.

Some sectors have expressed alarm over the rising prices of goods and have criticized the administration for allegedly not doing enough to help the poor and other vulnerable sectors.

Presidential spokesman Harry Roque claimed that the high inflation and lower peso are not alarming.

“Historically, it’s (inflation) high but it’s not ridiculously high... Even (former) president Gloria Macapagal-Arroyo has said that during her time, it was double-digit inflation,” Roque said in a press briefing here.

“So it’s under control. It is just becoming a political issue because the election is ap- proaching,” he added.

Roque accused the opposition of exploiting the higher commodity prices to discredit the Duterte administration. He also denied that the President voided the amnesty given to Sen. Antonio Trillanes IV to divert attention from price spikes.

Roque said the government has stepped up measures to mitigate the impact of inflation. He said the government is planning to import cheap diesel from countries that are not part of the Organization of Petroleum Exporting Countries.

The administration is also importing rice to augment the supply and stabilize the prices of the staple.

“The President also wants to open warehouses to bring out the rice hidden by traders,” Roque said.

Roque said traders are being encouraged to import pork and chicken to ensure adequate supply. The Bangko Sentral ng Pilipinas has also adjusted key rates to temper inflation, he added.

“We are addressing the issue of inflation. It will not happen overnight. A lot of money is circulating in our economy right now,” Roque said.

He stressed the government cannot just impose price controls, noting that it requires the declaration of a state of calamity, martial law or the suspension of the writ of habeas corpus.

“The Cabinet and the President believe lower prices can be achieved by increasing the supply, not price control,” the presidential spokesman said.

With regard to the weaker peso, Roque said it was caused by importation of construction materials for the ‘Build Build Build’ infrastructure program.

“That’s a natural consequence because we are allotting, for the first time, the biggest bulk of the budget towards public infrastructure,” he pointed out.

“That is not a reason to worry. Ultimately in the long run, the jobs to be generated by Build, Build, Build, will make up for the weaker peso,” he added.

Roque said the peso will stabilize in December because of the remittances from migrant workers.

Easing inflation

The Cabinet’s Economic Development Cluster (EDC), for one, expects inflation to taper off in the coming months with the implementation of various reforms, the Department of Finance (DOF) said yesterday.

In a meeting last Wednesday, the EDC laid out a number of reforms in the agricultural sector, which are intended to tame the rising prices of food.

Finance Secretary Carlos Dominguez, who chairs the EDC, said the economic team believes inflation will start to decelerate once these measures are in place.

“We believe that when the measures take effect, the inflation rate increase will be moderated,” Dominguez said.

Inflation hit a fresh nineyear high of 6.4 percent in August, bringing the year-todate headline inflation to 4.8 percent. This is higher than the government’s target range of two to four percent.

Dominguez said surging prices of rice, fish, vegetable and meat were among the main contributors to the higher inflation rate. Hence, he said economic managers have decided to implement reforms that aim to improve the productivity in the agriculture sector.

“Reforms in agriculture will continuously be implemented to address the supply issues causing the rise in food prices. A committed effort from government in the agriculture sector to boost supply of key projects and introduce policy reforms will bring down prices for all Filipino families,” Dominguez said.

One of the reforms to be implemented is the replication of the issuance of certificates of necessity to allow fish imports to be distributed in the wet markets in Metro Manila and other markets in the country.

On rice supply issues, the economic team ordered the National Food Authority (NFA) to release 4.6 million sacks of rice immediately to the market. The government also expects approximately two million sacks of rice previously contracted to be delivered before the end of September.

“In addition, the NFA Council authorized the importation of five million sacks that will be arriving over the next one-and-a-half months and another five million sacks to be imported early next year,” the EDC said.

Another 2.7 million sacks of rice will also be delivered to Zamboanga, Basilan, Sulu and Tawi-Tawi to address the reported rice shortage in these areas.

The EDC noted that harvest season has already started in many parts of the country, with the harvest for 2018 projected to reach 12.6 million metric tons or equivalent to 252 million sacks.

On track

Speaker Gloria Macapagal Arroyo echoed the EDC’s optimism, saying she is confident the administration would be able to arrest the rising inflation.

In talks with reporters, she recalled that when she was president, she had to control inflation higher than the 6.4 percent last month as reported by the Philippine Statistics Authority.

“I remember in my time in March of 2009, the inflation was 6.6 percent but by June (of that year), it was down to 1.5 percent. A lot of measures were taken. It was a combination, but the biggest single biggest factor was the massive importation of rice together with buying massively from the local farmers,” she said.

“Let’s pray that inflation has already peaked. But even if it has not, even if it peaked in my time at a higher rate, it was also able to go down very drastically.

“Remember, there were suggestions that came from Congress. I would like to reiterate those,” Arroyo said.

Vice President Leni Robredo, for her part, said vegetable gardening may help Filipinos cope with the rising costs of food particularly rice.

Robredo said Filipinos should not just rely on the government’s assistance but must also find ways to mitigate the effects of higher prices.

“For example they can grow their own fruits and vegetables,” the Vice President said in an interview in Naga City when asked for her advice for Filipinos after the country’s inflation rate hit its highest in nine years in August.

“They (Filipinos) should not just wait for help, they should also find solutions,” Robredo said.

She cited the residents of Zamboanga City, who are not suffering from hunger because of the fruits and vegetables they grow in their homes.

Robredo also urged Filipinos not to spend money on unnecessary items.

“We really need to save now that the prices of all commodities are high. Let’s not spend money on things we don’t need,” she said.