No easy solution to inflation in sight

By Herbert Vego

THIS month of March is marching to a crescendo of higher prices of prime commodities. At a time when we are supposed to rejoice for having regained jobs lost to Covid-19 pandemic, we grimace over the steep rise in prices of food and other basic needs.

The root cause of this income-draining inflation is widely blamed on the invasion of Ukraine by Russia, resulting in a war that is believed to have killed and wounded more than 10,000 fighters and civilians from both sides.

The world economy suffers because Russia is the third largest producer of petroleum after the United States and Saudi Arabia, exporting at least five million barrels a day of crude oil.  Simply put, the perceived scarcity of oil has pushed gas prices up.

Higher gasoline and diesel prices in the Philippines may also be attributed to excessive excise taxes brought about by Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law of 2017.

Unless TRAIN is suspended, the Department of Energy admitted that gasoline may rise to ₱78 per liter within the month; diesel, ₱69.

The domino effect on prime commodities scares minimum-wage earners who could no longer make both ends meet.

Even we in the middle class respond by pinching pennies, as in buying a half-kilo of meat instead of the previous one kilo at the risk of going undernourished.

But of course, there is always a bright side to this seemingly gloomy struggle for survival. In my case, I have learned to eat the “lowly” vegetables that I used to detest. Fortunately, it is the right step to healthier living and graceful aging.

To reiterate what I have said in previous columns on inflation, even the greedy merchants who impose higher prices for bigger profit eventually see the erosion of their own gains whenever they buy their own needs at higher prices, too. Sooner or later, whatever money they have saved in the bank, even if it earns interest, devaluates.

To the poor Juan dela Cruz, it could mean working harder and longer to buy a pair of shoes that used to cost ₱3,000, since he now has to raise an extra ₱500 to replace it with the same kind.

“Matuto na tayong mag-ipon,” I heard somebody tell a TV reporter, no doubt because he is still capable of saving.

That reminds me of a quotation from the book Poor Richard’s Almanac by Benjamin Franklin, whose face still identifies a 100-dollar bill: “A penny saved is a penny earned.”

Alas, not anymore.  Our own centavo is literally worth nothing. Excuse me, but I remember my childhood in the 1950s when I could buy a wrapped candy for one centavo.

Hasn’t the Great Book told us? “The love of money is the root of all evil” (1 Timothy 6:10).

In his column, our friend Alex P. Vidal recently quoted Mark Twain, “The lack of money is the root of all evil.”

Both are correct, methinks, because greed of money fuels big crimes while the lack of it forces the hungry to steal bread.

For those of us who prefer to behave, let us comfort ourselves with the thought that a devalued peso has more value than no peso at all.

The only way to keep pace with inflation is to earn more, whenever possible. Lucky are those who could “sideline” or go into business.

Those who demand wage increase but don’t get it are doomed to sink poorer.

Let’s take a look at the wage earner making P12,000 monthly. If this were his income in the 1980s, he might have lived like a prince. Today, he has to endure a spartan existence (probably with no electrical appliances) to have a roof over his head, and to feed, clothe and educate his children.

Presidential candidate Leody de Guzman campaigns on the platform of raising the daily minimum wage to P750 as the only way to cushion inflation. It is easier said than done though. For when laborers get wage hikes across the board, their employers would have to hike prices of their products to stay viable.

The better but also hard alternative would be to stimulate demand by keeping prices low.  With more products selling like hotcakes – in accordance with the economies of scale — both the producer and the consumers benefit. This is the “secret” behind the success of  dried-food exporters from Cebu.

The projected return to normal life as the Corid-19 pandemic subsides is also an opportunity for dreamers wishing for higher-paying work abroad.

Oh, well, I am still a dreamer at age 72. Would a hotel in New York City employ me as a doorman?