The national government should act swiftly in bringing down consumer prices before the situation turns into a “running inflation,” officials appealed on Thursday.
“We ask the government to stop dismissing inflation as a sign of a growing economy. Economic growth is meaningless if it does not redound to the uplifting of the lives of the poorest segment of our society,” Vice President Leni Robredo said she added.
Vice President Leni Robredo (Photo courtesy of Office of the Vice President of the Philippines via Facebook / MANILA BULLETIN)
Vice President Leni Robredo (Photo courtesy of Office of the Vice President of the Philippines via Facebook / MANILA BULLETIN)
Senators called on Malacaņang to start controlling inflation and the rising cost of goods, while the Bangko Sentral ng Pilipinas (BSP) sought for faster approval and implementation of non-monetary measures that could help bring down inflation rate that has already hit near 10-year high in August.
The call to bring down prices was made following the 6.4 percent higher-than-anticipated inflation reading for August, surpassing the BSP’s 5.9 percent single-rate estimate and forecast range of 5.5 percent to 6.2 percent.
The BSP wants government’s anti-inflation plan to mitigate price pressures, including rice tariffication, subsidy to public utility vehicles, and discount to fuel purchases by public transport, to be implemented in full and soon.
The BSP said that “persistent inflation pressures emanating from supply-side factors continue to require non-monetary interventions from the NG.” There are other mitigants, including the higher imports of rice which will be subsidized by the government to avoid supply constraints.
On the part of the BSP, it said, monetary authorities will have an even closer monitoring and “increased vigilance against the potential impact of recent developments on inflation expectations.”
BSP Deputy Governor Diwa C. Guinigundo said potential second-round effects they are monitoring will come from minimum wage adjustment, transport fare hike and inflation expectations.
Guinigundo stressed that these risks have matching mitigating social programs and other measures to cushion its impact, such as unconditional cash transfers for the poorest households and rice tariffication.
The bill amending the tariff system has been approved by the Lower House last month and the BSP is hoping it will be signed into law this month since it could lower inflation rate by 0.4 percentage points if passed within the expected schedule.
To temper price pressures from fare increases, Guinigundo said earlier that the government can help by providing subsidies at the soonest time possible for jeepney drivers, the P1 fuel discounts, and other fuel promo and reward programs for both public and private sector drivers.
Anti-inflation measures
On Wednesday, the government’s economic team listed several anti-inflation measures that Guinigundo, for one, was hoping will all be adopted this month to ensure that August’s 6.4 percent will be the inflation peak and will not be repeated for September.
The mitigating measures’ list – approved by the economic team including the departments of Finance and Agriculture – includes: allowing fish imports to be distributed in wet markets in Metro Manila; the release of 4.6 million sacks of NFA rice and some two million more to be delivered this month and another five million in the fourth quarter; another 2.7 million for areas with rice shortage; and five million sacks of rice to be imported in 2019. The measures also include chicken, sugar, and vegetables.
The BSP’s Monetary Board will meet on September 27 for its sixth policy meeting for the year. For the past three policy meetings, it has raised benchmark rate by a cumulative 100 basis points to manage and re-anchor inflation expectations which has remained elevated, and to protect the inflation target of two-four percent for 2019 and 2020.
BSP Governor Nestor A. Espenilla Jr. said the current inflation pressures are “driven at the first instance” by supply-side factors from higher global oil prices, increased excise taxes, and weather-related disruptions. These are factors that are generally outside the scope of monetary policy, he said. Possible second-round effects are watched out for from these sustained price pressures. Since March of this year, inflation rate has surpassed the two-four percent target.
Vice President Robredo said last month’s inflation rate confirmed the opposition’s repeated warning about food prices, notably rice, which would continue to increase “without effective government intervention.”
“We cannot simply ignore the fact that our fellow Filipinos are suffering, especially the poor, as the highest increases were observed in food and beverages that comprise the biggest share of a family’s household budget,” she noted.
Robredo suggested the stabilization of rice supply through changing the leadership at the National Food Authority (NFA), revisiting the excise tax on fuel, and re-assessing the unconditional cash transfer program.
Enough passion needed
Sen. Nancy Binay said Malacanang should show enough passion in resolving the inflation, the same zeal they seek to address the war on drugs and see Sen. Antonio Trillanes IV back to jail.
“We have to strengthen our initiatives to help ease the burden of inflation, including the provision of financial assistance to poor families and discounts to the transport sector,” she said.
Binay said the government should maximize its government-to-government arrangements to source out affordable petroleum products, particularly diesel in order to mitigate its impact to the high cost of basic goods and commodities.
“Ramdam na ng taumbayan ang pagsipa ng inflation. Unahin na muna nating resolbahin ang pagpigil sa pagtaas ng presyo ng mga pangunahin bilihin. Unahin muna natin ang sikmura bago politika, (The people now feel inflation kicking in. We need to prioritize resolving this and stopping the increases in the prices of basic goods. Let’s prioritize problems that deal with the stomach before politics),” she added.
Binay said it is imperative that the government re-focuses on the economy as higher inflation might be the trend until next year.
“We need to identify the key drivers and the range of internal and external factors that continue to have a material impact on the increase in prices, and how to arrest the nearly galloping speed,” Binay pointed out.
Sen. Joel Villanueva, for his part, lamented that the recent inflation figures “show that our economic managers are obviously not on top of this issue.”
“We cannot wait for prices to get further out of control. The economic managers do not seem to be serious in dealing with the problem,” Villanueva said.
Because of this, Villanueva said the Senate is now looking into the measures filed by some senators that sought a reversal of the fuel excise tax under the Tax Reform for Acceleration and Inclusion (TRAIN) law.
Sen. Bam Aquino, for his part, criticized the government’s economic managers for continuing to be in a state of denial.
He was pointing to their pronouncement that the 6.4 inflation rate in August “is not alarming” and “quite normal in a fast growing economy.”
“It’s not very normal for the poor to be drowning from the high price of goods,” said Aquino, one of four senators who voted against the ratification of the TRAIN Law.
Originally Posted by slakker
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