Inflation, stagflation?

"Huwag naman sana."

Our economic managers are in a fine pickle.

Inflation has reared its ugly head. And monetary tools cannot just stem the situation. As far as food is concerned, there are real supply problems.

Neither will price controls work. The pork holiday in most Metro Manila markets is an indicator that retailers are resisting the “artificial” price caps.

The ceilings we set, which work only for a short period, can be accepted by the market only if they are realistic. Beyond that, as seems to be the case right now, the market recoils.

It is not as simple as computing the basic costs of hog production and tacking logistics to come up with a price cap. There are many other things to consider. Keeping the produce in good, saleable condition requires a cold chain that is largely unavailable to wet market retailers, or with their obsolete chest freezers, create spoilage that they have to input to their total cost. There is also the “reseco” or loss of weight from carcass to chops.

But the bigger problem which has no instant solution is the extent of devastation the African Swine Fever has wrought on the hog industry. Estimates of the number of hogs culled vary, from as high as seven million which some private sector circles tout, to as low as half a million which the government explains.

Our quarantine officers and our ports of entry, both air and sea, did not act quickly enough as early as 2018, and it is more and more difficult to stem the tide of infestation.

Vegetable production was the victim of weather disturbances last year, plus in the case of highland produce, the unusually low temperature dips this season. But these are temporary problems because it is fast enough to recover lost ground in raising vegetables. But not in hogs, or poultry.

As a result, inflation spiked to 4.2 percent in January. Some economists fear that it could reach 6 percent in the lean months of the wet season, with an annual average of 5.2 percent to 5.4 percent, which is way beyond what our economic managers predict.

Oil prices are acting upwards. Oil producers are slowly but surely limiting their production while demand increases as economies recover slowly. How high the oil prices reach could impact severely in a country which is import-dependent like ours.

On the other side of the equation, the COVID pandemic has wrought havoc on our economy, with millions losing jobs and livelihood, small businesses closing down, and even OFWs returning home for lack of work abroad.

That translates into low purchasing power and lack of consumer confidence in their near future. Low demand plus low supply is a deadly combination. High inflation at a time of low purchasing power means stagflation.

In short, a stagnant economy at a time of inflationary spiral. Huwag naman sana.

Both some legislators and the private sector want government to stem the tide by more fiscal spending to stimulate low purchasing power and create jobs. They point out that we have ample room to borrow, with our credit standing still good. The US under Biden, for instance, has come up with a 1.9 trillion dollar package to revive business and create jobs.

The budget department claims that there are not enough funds to support further stimuli. And our revenue generating agencies under the finance department are not exactly optimistic about collections.

The trade department tells us that with the passage of CREATE, formerly CITIRA, formerly TRAIN 2, there will be millions of jobs created and investments from foreign sources will flow in. But let’s be realistic. These take time. And elections are around the corner, which creates a wait-and-see attitude among prospective investors.

The Monetary Board has kept interest rates steady, knowing that another round of cuts will not stimulate business enough. And the Bangko Sentral has to keep a sharp eye on the rate of bank loans that are not being repaid well enough.

**

Mercifully, the vaccines are arriving. Some 120,000 doses of Pfizer-Biotech N is arriving this week, and we will begin inoculating our frontline health workers on Monday the fifteenth.

More vaccines are expected to come in, with Moderna and Astra-Zeneca on the line, perhaps Sinovac, and hopefully the roll-out will be well managed.

It is a relief that many local governments, from Manila to Navotas, Taguig to Makati, have prepared their storage facilities well in advance. Central Luzon provinces like Pampanga and Bataan have also procured their cold chain requirements.

Better still, it seems that Sec. Carlito Galvez and Sec. Vince Dizon are in charge, and they are playing good music with the LGUs in Metro Manila.

That gives President Duterte reason to be hopeful that things will turn around by the end of this year, insofar as the vaccine roll-out is concerned. Sana nga.

**

The President is egging many of his cabinet members to go for the Senate in next year’s national elections. The recent announcement of several names have been met with raised eyebrows by many pundits, considering how tight the Senate races would be in 2022.

“Masikip,” they say.

The cabinet members who are being eyed, or are eyeing, a run for the Senate are: Mark Villar, Art Tugade, Harry Roque, Karlo Nograles, Francisco Duque, Silvestre Bello, Ramon Lopez, Salvador Panelo, Wendell Avisado, Carlito Galvez and balik-senador Gringo Honasan.

Among the Senate re-electionists are pro-administration or independents like Migs Zubiri, Joel Villanueva, Sherwin Gatchalian, perhaps Ping Lacson and Dick Gordon who are however eyeing another try at the presidency. Senator Pacman, due for re-election, is hell-bent on going for the top elective post and has started doing the rounds, distributing gift packs and thousand-peso bills.

Among the opposition, there are Kiko Pangilinan, Risa Hontiveros, Leila de Lima, perhaps Sonny Trillanes, and Bam Aquino otra vez.

Then there are the balik-senadores Chiz Escudero and Loren Legarda, possibly Alan Peter Cayetano, enduring political brands considered shoo-ins. And the brothers Jinggoy and JV Ejercito. Also on the comeback trail is former senator and former vice-president Noli de Castro.

From the House, there are two fine ladies with an almost certain path to election: Vilma Santos Recto, who is going national, while Sen. Ralph goes home to Batangas. And Lucy Torres Gomez of Ormoc in Region 9, which for decades has had no senator. Maybe Martin Romualdez.

Well-known names like Mike Enriquez, the “Imbestigador” of GMA-7, are also eyeing a run. Doc Willy Ong, who despite being a newbie in politics, made a good showing in 2019. And friends are egging on Kim Atienza, broadcaster and passionate environmental crusader, to enter the fray.

Sobrang sikip. Good luck to all.