More on inflation

By Herbert Vego 

IN a previous column, I told a tale about a housewife who went to the public market to buy meat and veggies, only to find that her usual budget was no longer enough.

Indeed, the purchasing power of the Philippine peso has slid to a record low. As of this month, the average retail price of beef ranges from PHP 375 to PHP 580 per kilo, depending heavily on the specific cut and market location.

Whatever money we have in the bank loses corresponding value, since it earns very negligible interest.

A US dollar now costs almost PHP 62.

We fear the possibility of our currency hitting PHP 65 against the dollar.

Can we depend on the Bangko Sentral ng Pilipinas (BSP) to revitalize the peso, knowing that on its shoulder lies the burden of maintaining monetary stability?

A BSP press release recently announced, “The BSP is faced with the challenge of dealing with the consequences of strong foreign exchange inflows that have resulted in strengthening the Philippine peso against other currencies.”

In other words, we need a surge of foreign exchange into the country to boost its value.

Meanwhile, we are coming to terms with what used to be an unfamiliar economic condition known as “stagflation,” which is characterized by the simultaneous occurrence of slow economic growth, high unemployment, and rapidly rising prices (inflation).

The sudden price-hike of the Middle East oil price and the peso depreciation are blamed as the primary triggers of stagflation. Take note that more than 95% of our crude oil comes from the Middle East.

The crisis stems from disruptions around the Strait of Hormuz — between the southern coast of Iran and the northern tip of the Arabian Peninsula — through which nearly one-fifth of global oil supply moves.

According to the IBON Foundation, while the Philippines is not in an official technical recession, it is experiencing a deep structural and stagnation crisis because growth is sluggish, leaving millions of Filipinos struggling with poverty despite government claims of economic resilience.

Philippine National Bank (PNB) chief economist Alvin Arogo believes that the Philippines is showing clear stagflation, with high inflation and slow growth persisting. The combination of rising prices and weak growth shows that stagflation risks are present.

This is worrisome for wage earners because it can make unemployment worse.

The Philippine Institute for Development Studies (PIDS) recently raised the warning that middle-income Filipinos like teachers, clerks, drivers and small-store owners are also suffering “significant welfare losses.” They need to tighten their belts further while receiving little to no direct government support.

We know of neighbors who are just one hospitalization away from falling into poverty, yet they remain invisible in subsidy programs.

But let’s not be so pessimistic. As reported by the Philippine Statistics Authority (PSA) – halleluiah! — inflation has eased from 6.8% in May to 6.4% in June 2026.

-oOo-

EPIRA AMENDMENT MAY HURT ELECTRIC COOPS

PRESIDENT Ferdinand Marcos Jr. sounded “convincing” in his fifth State of the Nation Address (SONA) when he demanded the immediate amendment of the Electric Power Industry Reform Act (EPIRA) by way of prohibiting power distribution utilities from passing on system loss charges and their corresponding value-added tax (VAT) to consumers.

System loss refers to electricity lost in power lines before reaching end users’ electric meters, including power lost to pilferage.

How would the President’s demand affect MORE Electric and Power Corp. (MORE Power), the power-distribution utility in Iloilo City?

Jonathan Cabrera, MORE Power’s PR representative, said that the company remains confident and unconcerned because its modernized infrastructure and aggressive grid rehabilitation have kept its actual technical and non-technical losses well below regulatory limit set by the Energy Regulatory Commission (ERC).

Removing system loss charges from consumers’ electricity bills may initially appear beneficial, but it would inflict painful consequences for the electric cooperatives that have heavy system losses.

Matira ang matibay!