Annus horribilis
Unless the administration does something big and fast between now and the coming weeks, this year may turn out to be an annus horribilis (horrible year) for the country.
In January, the country’s inflation rate, as reported by the Philippine Statistics Authority, was 3.4 percent, slightly higher than the preceding month’s 2.9 percent.
The increase did not raise concern because it was widely thought of as a result of the surge in prices of and demand for goods during the holiday season. Based on past experience, it was expected to stabilize after the New Year fever has died down.
But it did not. Instead, the inflation rate climbed to 3.8 percent in February, 4.3 percent in March, 4.5 percent in April, 4.6 percent in May, 5.2 percent in June, 5.7 percent in July and a whopping 6.4 percent in August, the highest in nine years and also among Asean countries.
For those in the D and E classes of our society, the latest inflation rate effectively translates to a higher percentage because being at the bottom of the food chain, they wind up paying for all the incremental expenses in the production and delivery of basic commodities to them.
As if these figures are not distressing enough, last week, the peso hit a 13-year low at P53.80 to the US dollar and may, unless effective measures are taken by the monetary authorities, go up.
With more pesos needed to buy oil and its derivative products and the additional excise tax imposed on them by the Tax Reform for Acceleration and Inclusion (TRAIN) law, transportation costs are expected to further rise and, inevitably, also the prices of goods and services.
In the wake of this bad news, it’s not surprising that, according to the Bangko Sentral ng Pilipinas, business outlook on the economy has dipped to its lowest since 2010.
What happened? What went wrong with the rosy predictions at the beginning of the year by the administration’s supposedly experienced and highly educated economic managers?
In an effort to clear themselves of the blame, they cited external factors, e.g., spike in oil prices and weakening of the peso, as the principal causes for the inflation surge. And that, if at all, the TRAIN law and other economic policies of the administration had minimal contribution to that condition.
If reasons beyond the country’s control caused the inflation surge, how come our Asean neighbors who are subject to the same conditions enjoy favorable inflation rates?
Consider these figures: In August, Indonesia’s inflation rate was 3.2 percent; Vietnam, 3.98 percent; Malaysia, 0.9 percent; Thailand, 1.6 percent; and Singapore, 1.9 percent.
Like the Philippines, rice is the staple food of these countries, they are dependent on the Middle East for their oil product needs and their currencies are not immune to foreign exchange fluctuations in the global market.
Their economic or financial managers must be doing something right in keeping inflation rates from reaching levels that would adversely affect the ability of their citizens to reasonably meet the requirements of daily living.
Unless the administration’s economic managers live in their own cocoon or have no communication lines with their fellow Cabinet members, it is not reasonable for them to put the blame on the inflation spike solely on the failure of the departments of Agriculture and Trade and Industry to take appropriate measures to maintain a steady supply of basic commodities and prevent their prices from spiraling.
Finger pointing aside, the ball is in the court of the economic managers. They have to take the lead in bringing down the inflation rate before the onset of the holiday season. If it fails to do so, the impact of that financial problem on the Filipinos will be more strongly felt.
It has been said that war is too important to be left to the generals. Perhaps, that saying also applies to the economy—it is too important to be left to the economists.
