The rate of inflation could go as high as 7.1 percent in September, driven by higher prices of rice, fuel and some agricultural products as well as the weakening peso, the Bangko Sentral ng Pilipinas said Friday.
“Higher domestic petroleum prices, higher prices of rice and other agricultural commodities due to Typhoon “Ompong,” and the peso depreciation contributed to the upside price pressures for the month,” the BSP Department of Economic Research said in a statement Friday, projecting inflation would settle within a range of 6.3 to 7.1 percent.
On the high end of the department’s estimate, this would be faster than the 6.4-percent inflation recorded in August, which was a nine-year high.
The last time the inflation rate breached 7 percent was in February 2009 at 7.2 percent.
But the Department of Finance said it expects the inflation rate to be unchanged at 6.4 percent in September, as lower power rates could offset higher food prices.
Finance Undersecretary Gil Beltran, also the DoF’s chief economist, said in an economic bulletin on Friday that month-on-month price increases in September likely decelerated from 0.9 percent in August to 0.6 percent.
As a result, he said, “September year-on-year inflation is seen at 6.4 percent, unchanged from August.”
“Price increases in food items are the main drivers of inflation. The decline in power rates, however, moderated the inflationary pressure from non-food items,” Beltran said.
Beltran added that strong monetary action by the BSP backed by two successive 50-basis-point policy rate hikes and the President’s support for administrative measures proposed by the Economic Development Cluster to remove non-tariff barriers on major food items would moderate food inflation in the short run.
“Policy reforms including rice tariffication and budget support for agricultural productivity programs will stem similar inflation episodes in the future,” he said.
Inflation in August reached a nine-year high of 6.4 percent, faster than the 5.7 percent a month ago, driven mainly by higher prices of fish, rice, meat and vegetables. This brought inflation in the first eight months to 4.7 percent, well over the target range of 2 to 4 percent set by the BSP early this year.
National Economic and Development Authority Director-General Ernesto Pernia said Friday that the declaration of a state of calamity in Ompong- and monsoon-hit areas would help manage expectations on inflation.
“We are getting ready to respond to the possible impact of the calamity on our macroeconomic targets. The declaration of a state of calamity in the affected areas is one measure that will enable the government to use contingent credit lines and mitigate rising inflation,” Pernia said.
President Rodrigo Duterte signed on Thursday declared a state of calamity in Regions I, II, III and the Cordillera Administrative Region.
The proclamation stated that declaring a state of calamity in these areas would provide a basis for price control measures that could mitigate the economic impact on the affected populations. It would also effectively provide the government ample leeway in using funds for recovery and rehabilitation efforts, as well as the delivery of basic needs and services.
Typhoon Ompong hit mostly northern Luzon that claimed at least 88 lives and caused billions of pesos worth of agricultural damage.
On Thursday, the Bangko Sentral raised by another 50 basis points the policy rate to 4.5 percent, in a bid to temper the accelerating inflation that is still seen to peak in the third quarter. This brought the total increases in policy rate to 150 basis points since May 2018.
On Friday, the Cordillera office of the Philippine Statistics Authority said the average farm gate price of palay and other varieties went up to P19.40 a kilo during the first quarter this year, compared to the same period last year when it stood at P17.24 a kilo.
During the same period, the PSA noted that the price of yellow corn increased from P11.92 per kilo to P12.75 per kilo.
The average farm gate price of live weight livestock and poultry increased from the first quarter last year to the first quarter this year, with the price of cattle going from P112.85 per kilo to P118.55 per kilo; hogs from P103.75 to P117.36 per kilo; goat from P100.24 per kilo to P103.96 per kilo; native chicken from P134.66 per kilo to P144.15 per kilo and duck from P130.75 per kilo to P139.01 per kilo.
As production fell, prices of most leafy vegetables in the region also increased, with the farm gate price of broccoli rising from P15.59 per kilo to P42.62 per kilo; cabbage from P15.26 per kilo to P19.39 per kilo; cauliflower from P11.63 per kilo to P50.84 per kilo; lettuce from P11.81 per kilo to P61.22 per kilo; Chinese pechay from P6.51 per kilo to P15.59 per kilo; and native pechay from P24.74 per kilo to P30.98 per kilo.
But the price of celery fell from P31.36 per kilo to P23.03 per kilo because of higher production in Benguet.
The average farm gate price of ampalaya went up from P25.18 per kilo to P22.26 per kilo; chayote from P4.41 per kilo to P6.99 per kilo; squash from P17.40 to P22.57 per kilo and tomato from P15.79 per kilo to P19.70 per kilo. The price of purple eggplant dropped slightly from P21.83 per kilo to P21.6 per kilo.
The average farm gate price of roots and tubers generally declined. Carrots decreased from P34.33 per kilo to P25.27 per kilo; sweet potato from PP27.37 per kilo to P19.88 per kilo and cassava fresh tubers for food from P16.05 per kilo to P10.74 per kilo.
The price of white potato increased from P22.23per kilo to P30.39 per kilo, however.
Farm gate price of beans and legumes increased.
The price of habitchuelas was up from P18.61 per kilo to P25.04 per kilo; string beans from P23.99 per kilo to P26.92 per kilo and sweet peas, Chinese Baguio beans from P53.05 per kilo to P80.91 per kilo.
The price of native ginger went down from P34.61 per kilo to P25.18 per kilo and Hawaiian ginger from P34.35 per kilo to P25.66 per kilo.
Prices of onion leeks, on the other hand, went up from P27.21 per kilo to P36.15 per kilo and bell pepper from P50.85 per kilo to P52.49 per kilo.
The average prices for different varieties of banana went down, while prices for green carabao mango and Hawaiian papaya rose.
The PSA said its farm prices survey is a nationwide household-based monthly survey designed to gather data on farm gate or producer’s prices received by farmers, livestock and poultry raisers for the sale of their produce, at the first point of sale, excluding transportation and delivery cost.
An opposition lawmaker on Friday said the Duterte administration’s wrong priorities were the primary reason for its failure to address inflation.
Citing the latest Pulse Asia survey on Urgent National Concerns and the Performance Ratings of the National Administration on Selected Issues, Magdalo party-list Rep. Gary Alejani said 51 percent of Filipinos are dissatisfied with how the government is handling the problem of inflation.
“This is not a surprise since this administration prioritizes the silencing of the opposition over providing solutions to the grievances of the people and other pressing problems of the country right now,” Alejano said.
Alejano reiterated his call to suspend the excise taxes on fuel imposed by the Tax Reform for Acceleration and Inclusion law to mitigate the effects of rising inflation.
READ: Oil prices still rising: 7th straight week now
Alejano also accused the administration of resorting to diversionary tactics to keep the public attention’s away from gut issues.
“It has been the tactic of the Duterte administration to divert the attention of the public away from the real issue to mask its incompetence. But when the problem hits the people every day, in their every meal, there is no escaping no matter how the Duterte administration tries to bury the problem,” Alejano said.
The Pulse Asia survey results said controlling inflation is the most urgent national concern.
Alejano said the result of the survey is a manifestation that the effects of surging prices could really be felt by the Filipinos despite Malacañang’s efforst to play down the problem.
“The surging prices cannot be detached from the effects of TRAIN 1 despite the continuous denial of Duterte’s economic managers,” Alejano said.
Meanwhile, Senator Joel Villanueva, chairman of the Senate committee on labor, employment and human resources development, said it would be better to delay the passage of the TRABAHO (Tax Reform for Attracting Better and High-quality Opportunities) bill if it thousands of Filipinos would be made jobless.
During a Senate hearing on the TRABAHO bill, Labor Department Director Dominique Tutay admitted that the second tax reform package could result in job losses as it might affect the industry and services sector, including technology-driven industries.
The Department of Labor and Employment also said that 30,000 jobs in the industry and services sectors were lost in the first quarter of 2018, based on their job displacement monitoring.
DOLE said that their agency and the Department of Finance (DOF) have yet to complete their joint study on the impact of TRABAHO bill on jobs in two weeks.
In a statement, the Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI) said the passage of TRABAHO bill, particularly the House version (HB 8083), would force them to lay off 140,000 workers.
They said several multinational companies are planning to move out of the country due to uncertainty of keeping their tax incentives here.
The TRABAHO bill aims to cut corporate income taxes down to 20 percent and remove redundant fiscal incentives.
Citing the projected job losses, Villanueva said that the DOLE “should work together with other agencies to make sure job reduction won’t be a possibility if the bill is enacted into law.
“With the ballooning inflation that has burdened our consumers, the Filipino people cannot suffer another blow through the loss of jobs that might be caused by the new tax reform package,” Villanueva said.
Allaying fears on job losses, the DOF said the bill allots for a contingency fund amounting to P500 million to be used as cash grants for displaced workers. An additional P500 million will also be provided for trainings and skills upgrading.
“Providing cash grants is just a band-aid solution for our displaced workers. It cannot sustain them for a long time, that is why we have to make sure that the Trabaho bill will not result in unemployment,” Villanueva said.
The senator added that on its part, DOLE should be ready with its employment adjustment program to ensure adequate re-tooling and re-training programs are in place if the bill is enacted.
“The thousands of jobs that are projected to be lost due to Trabaho bill is a serious matter. The DOLE, along with other concerned agencies, should be proactive in addressing this problem,” Villanueva said.
Labor Secretary Silvestre Bello III said Friday that minimum wage earners in Metro Manila are expected to get a P20 daily wage increase in October, raising the minimum daily rate from P512 to P532 a day.
However, the Alliance of Labor Unions-Trade Union Congress of the Philippines said the amount is demeaning and an insult to the millions of workers in Manila.
Bello, on the other hand, said the rate hike would protect the interests of the stakeholders, which need to be balanced so that workers would not suffer if many establishments are forced to shut down because of rising costs.
COMMENT DISCLAIMER: Reader comments posted on this Web site are not in any way endorsed by Manila Standard. Comments are views by manilastandard.net readers who exercise their right to free expression and they do not necessarily represent or reflect the position or viewpoint of manilastandard.net. While reserving this publication’s right to delete comments that are deemed offensive, indecent or inconsistent with Manila Standard editorial standards, Manila Standard may not be held liable for any false information posted by readers in this comments section.