Plates go empty
Ordinary inflation can be likened to a bad cold as it makes life harder but it may be endured if the body is healthy.
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Daily Tribune
Ordinary inflation can be likened to a bad cold as it makes life harder but it may be endured if the body is healthy.
When prices rose 7.2 percent in September from 6.1 percent in August, the number itself was not the worst part. Filipinos have lived through higher inflation before.
After four consecutive months of easing, the rise in the inflation number drew the attention of economists as it suggested that those who had hoped the worst was over may have been too optimistic, too early.
Noel Leyco, chief economist at Credit Rating and Investors Services Philippines Inc. (CRISP), noted that prices rose one percent in September alone. This indicated the acceleration was driven by current price pressures rather than a base effect from last year’s low figures.
Ordinary inflation can be likened to a bad cold as it makes life harder but it may be endured if the body is healthy. Runaway inflation is a fever that feeds itself because once people expect prices to keep rising, they act in ways that push them higher.
Workers demand higher wages, sellers mark up goods early so they won’t be caught short, and families rush to stock up on rice which makes it cost more as supply runs low.
The country has seen it before. In 1984, after the political and economic shocks that followed the Aquino assassination, prices rose at around 50 percent a year and wages bought fewer goods and services.
In 2008, a global spike in rice and oil pushed inflation to peak at about 12.5 percent and long lines for cheap rice were common.
In 2018, the rice shortage and new fuel taxes pushed inflation to 6.7 percent, and in early 2023 it touched 8.7 percent. Each time, the damage first hit the people with the least capacity to absorb it.
Food drove nearly three-quarters of last September’s rise, with vegetables up 12.2 percent in a single month after the severe flooding in August.
Rice prices rose 20.3 percent over the year. Fuel and vehicle running costs were up 40 percent, and because fuel affects everything that must be trucked, shipped, or cooked, it works like a tax on every meal.
Even core inflation, which strips out the increase in food and fuel, reached 4.7 percent, the highest since November 2023. A spike in core inflation is an early sign the problem is spreading across the economy.
For the poorest 30 percent of households, inflation was 9 percent, the sixth straight month above 8 percent and the highest for the poor since February 2023.
The reason, Leyco explained, is simple: food takes up 51 percent of a poor family’s spending, compared with 35 percent for the average household, so when rice and vegetables jump, the poor feel it twice as hard.
In seven regions — Western Visayas, Davao, Caraga, the Cordillera, Central Visayas, Bicol and the Bangsamoro Autonomous Region in Muslim Mindanao — the poor face inflation of 10 percent or more.
For a family of five on the poverty line, that means roughly P1,250 more each month to buy what they bought a year ago.
The government is holding tools it refuses to use, Sonny Africa, executive director of IBON Foundation, pointed out.
The oil deregulation law allows the state to act on fuel prices during an energy emergency, and the Price Act allows caps on basic goods, yet neither has been used.
Africa noted that government cash aid reaches only 2.7 million recipients, even as rising prices squeeze more than 21 million poor and low-income families. Even tax relief on liquefied petroleum gas and kerosene, he said, saves the poorest half of families only a few pesos a month.
Leyco proposed a more targeted response: A temporary cash top-up through the existing 4Ps system, P20-per-kilo rice support for the hardest-hit regions, and an automatic trigger that would be activated whenever inflation for the poor remains above 8 percent.
One-time aid is hardly a solution to a permanent rise in prices. Ayudanomics may provide temporary relief, but it does little to address the deeper problem — and could only raise the political heat among an increasingly discontented public.
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