Expect prices to keep rising until September

AT the end of last month, June, the Philippine Statistics Authority (PSA) reported that the inflation rate year-on-year jumped by 5.2 percent, the highest in five years. It had exceeded the Bangko Sentral ng Pilipinas forecast of 4.3 to 5.1 percent. It was higher than the Department of Finance’s expectation of 4.9 percent. And it was much higher than economists’ prediction of 4.8 percent. The PSA said the highest price increases have been in the food and non-alcoholic beverage index at 6.1 percent.

“Inflation” is the term used by economists. Ordinary people like office works and housewives going to market understand it as “rising prices.” Long before economists came up with their observations and computations, housewives had already felt the effect of price increases on their marketing. Jeepney passengers have begun paying 11 more for their fares.

The 5.2 percent is the national average as computed by the Philippine Statistics Authority. Among the various regions of the country, the PSA said, the inflation rate was highest – 7.7 percent – in the Autonomous Region of Muslim Mindanao (ARMM) composed of the provinces of Basilan, Lanao del Sur, Maguindanao, Sulu, and Tawi-Tawi. Marawi City, which has not recovered from the five-month siege by the Maute last year, is in Lanao del Sur. Inflation has now been added to the Marawi people’s many woes.

In its analysis of the high inflation rate, the PSA said it was due to faster price increases for food, fuel, and transport, as well as the external factors of world oil prices and depreciation of the peso. In particular, the prices of alcoholic beverages and tobacco had climbed 20.8 percent.

“We remain hopeful that inflation is kept at bay and will taper off by year-end,” Socioeonomic Planning Secretary Ernesto M. Pernia said. “We expect inflation to peak in the third quarter and taper off by October.” By Pernia’s own estimate, we can expect prices to continue rising up to the third quarter of this year – September – before, he hopes, tapering off.

Some members of the Senate have blamed the Tax Reform for Acceleration and Inclusion (TRAIN) Law for the sharply rising prices. “Our economic managers should be flexible. They cannot afford to be hard-headed… and insist that they did nothing wrong,” Sen. Panfilo Lacson said. Fellow Sen. Paolo “Bam” Aquino added: “In just one year, the country’s inflation rate doubled but the government refuses to bend on the TRAIN Law.”

The government’s economic managers have insisted that the inflation is mostly due to rising global oil prices and the weakening of the Philippine peso, but many economists blame the tax increases under TRAIN, particularly the imposition of a tariff on diesel where there was none before. Diesel powers the transport of all consumer goods as well as passenger buses and trains, and the operation of many power plants.

We may have to live with rising prices for several more months. Secretary Pernia’s most hopeful estimate is up to September. We must hope that the problem will not worsen too much for the sake of our poorer folk who have been hit hard by the rising prices. The government’s economic managers should not allow this and they should be able to take the needed steps, including a temporary suspension of the tariff on diesel.