Global oil prices raising inflation fears

WHEN market prices started rising last year, critics blamed the administration’s Tax Reform for Acceleration and Inclusion Act (TRAIN) which, while lowering personal income tax rates, imposed a tariff of 12 per liter on diesel and other fuel imports where there had been none before. The new tariff raised the cost of diesel, thus also raising the cost of transporting goods to markets and market prices themselves.

The government, however, maintained that the rising market prices then were due largely to increases in global oil prices, a weakening peso, and price manipulation by unscrupulous businessmen and market vendors.

Inflation hit a high of 6.7 percent in September and October, 2018, before it started falling to 6 percent in November, to 5.1 in December. It continued to fall to 4.4 in January, 2019, to 3.8 in February, and 3.3 last March.

Market prices have since been steady with this

very low inflation rate of 3.3 percent. But the news last week said global oil prices had reached their highest level since November, 2018, at $70.65 per barrel in international benchmark Brent Futures. Prices were being driven upward by the announcement of the Organization of Petroleum Exporting Countries (OPEC) that it was continuing to cut supply for four months in a row.

In addition, the US was applying sanctions against Iran and Venezuela, forcing these countries to reduce their oil production and exports. There is also a growing military conflict in Libya which could disrupt oil supplies from that and other Middle East countries.

We hope we will not have a repeat of last year’s events, but now we are going through a rise in global oil prices similar to the start of the rise in January, 2018. Our officials, we hope, are ready to avert a repetition of last year’s ordeal. They should be specially ready to counter any new effort at price manipulation.