The inflation rate in the Philippines has consistently risen since January this year after staying at manageable levels in the last four months of 2017. Authorities must have seen the trend, especially in the first eight months of 2018, and should have sounded the alarm sooner before things could get out of hand.
From just around 3 percent in the last four months of 2018, the inflation rate steadily rose from 3.4 percent in January to 4.5 percent in April, the start of the second quarter. The rate rose further to 5.2 percent in June and alarmingly to 5.7 percent in July and 6.4 percent in August.
The Bangko Sentral ng Pilipinas has adjusted the interest rate by one full percentage point since then in a bid to reduce the money in circulation and curb spending but the prices of goods and services just the same rose at a faster pace.
Bangko Sentral ng Pilipinas Nestor Espenilla has conceded that reining in the money in circulation will not slow down rising prices. Cost-push pressures, or less supply of goods, are fueling inflation. This is evident in the prices of rice, fish and other food products, which have dramatically risen in the past few months.
The Department of Agriculture and the National Food Authority, which are supposed to manage the country’s rice inventory and import rice to replenish its stocks, have not responded quickly to cost-push pressures. The two agencies were not quick on the draw and allowed the rice supply situation to worsen.
Data from the Philippine Statistics Authority show that alcoholic beverages and tobacco posted the highest price increase of 21.6 percent in August, followed by food and non-alcoholic beverages at 8.5 percent. The weak performance of the fisheries and other crops in the first six months of 2018, with output falling 2.14 percent and 0.44 percent, respectively, resulted in lower supply and higher prices.
Adding to the inflationary pressures are increased transport cost and electricity rates following the rise of oil prices in the world market and a weak peso in relation to the US dollar.
The Bangko Sentral should not be totally relied on to tame the inflation rate. The Department of Agriculture and the NFA are responsible in stabilizing the supply of rice, fish and other agricultural products. They have been sleeping on the job and should be accountable for most of the inflationary pressures.