The rate of inflation jumped to an almost 10-year high in September, data showed Friday, putting pressure on President Rodrigo Duterte to act as the cost of food and fuel hit the country’s poor in the pocket.
Consumer prices have risen every month this year, with food surging further after Typhoon “Ompong,” the world’s most powerful storm in 2018, smashed into the country’s northern agricultural heartland in mid-September.
Increases have been powered by a collision of factors including Duterte’s massive spending on a broad infrastructure building effort, climbing oil prices and weak farm output.
READ: Oil prices still rising: 7th straight week now
Consumer price increases accelerated to 6.7 percent, from 6.4 percent in August, in the steepest climb since February 2009, the Philippine Statistics Authority said.
“We… understand that many are feeling the hit of a faster inflation rate, particularly those who toil so hard just to keep up,” Duterte’s economics team said.
The tens of millions who get by on less than $2 per day have been especially hard hit by the increase.
The government has boosted imports of rice following shortages but authorities acknowledged Friday that grain prices remain “elevated” due to the typhoon.
Analyst Astro del Castillo said the problem “will not be solved overnight” because some factors are beyond the government’s control, such as oil prices. Global crude prices are sitting at a four-year high around $85 and there are warnings they could break $100.
However, Del Castillo said the people expect the President to do something about it.
“You’ve seen the [opinion] surveys. The people would like inflation to be the government’s top priority,” he added.
The central bank last month jacked up key rates for the fourth time this year, while also raising its inflation targets for this year and next.
Passage of a law lifting import quotas on rice and extra imports of other food items “could lead to an earlier return of inflation to within the target range in 2019,” it added.
Analysts believe the pain may not be over yet, with interest rates expected to climb another full point in the next six months.
The peso has been hovering at 13-year lows, closing at 54.32 to the US dollar on Thursday—making imports more expensive—while the stock market has plunged about 17 percent since December, making it one of the world’s worst performers.
The PSA attributed the high inflation rate to faster increase in the prices of food and non-alcoholic beverages, which went up 9.7 percent in September.
Relative to the annual rates in the previous month, annual increases were also higher in the indices of alcoholic beverages and tobacco, 21.8 percent; transport, 8 percent; clothing and footwear, 2.5 percent; furnishing, household equipment and routine maintenance of the house, 3.6 percent, and health, 4.1 percent.
Duterte’s economic team—composed of Finance Secretary Carlos Dominguez III, Budget Secretary Benjamin Diokno and Socio-Economic Planning Secretary Ernesto Pernia—said they were working swiftly to temper the rise in the prices of goods and offer relief to those most affected.
READ: Government takes steps to curb rising prices
“We remain committed to our goal of ensuring price stability, along with our overarching aim of translating sustained broad-based economic growth to comfortable lives for everyone,” they said in a statement.
They said supply disruptions caused by the onslaught of typhoon Ompong recently in the regions of Ilocos, Cagayan, and Cordillera Autonomous Region pushed food prices up. Latest data from the government also showed that damage to agriculture, including facilities and infrastructure, amounted to P26.8 billion.
“This has kept the price of the country’s staple grain elevated despite the arrival of some imported rice and the improvement in the rice stocks of the National Food Authority. The declaration of a state of calamity we have proposed in these regions through the President’s Proclamation 593, series of 2018, should provide some needed relief,” they said.
They expressed confidence that inflation would taper off by yearend and go back to the target range of 2 percent to 4 percent early next year.
“Global fuel prices remain a concern in the near term given the gloomy outlook on oil supply and an increasing demand for petroleum products during the winter. Thus, we urge a quick response to address this upside risk, including demand-side management strategies,” they said.
They said one of the proposed measures was to reduce the country’s overall energy demand through the Department of Energy’s e-Power Mo program, the public utility vehicles modernization program of the Department of Transportation, and other renewable energy initiatives.
The Palace blamed higher world oil prices for the continued rise in inflation.
“When it comes to inflation, we all know that the rise in crude prices is one of the main drivers,” said Presidential Spokesman Harry Roque, speaking in Filipino to radio dzMM.
Critics, however, also blame the high excise tax on gasoline and other fuel products, imposed this year as a result of the Tax Reform for Acceleration and Inclusion law.
There are several efforts in Congress to amend the law to remove the excise taxes, which are scheduled to go even higher in 2019 and 2020. With AFP
