By Joshua Corcuera
Last week, authorities and media outlets have reported that the inflation rate in the Philippines has accelerated further from 6.1% in June to 6.4% last July—an implication that we all have to brace for higher priced goods and services.
For context, inflation refers to the rate of increase in prices over a given period of time—in Filipino, pagtaas ng presyo ng bilihin. Data from the Philippine Statistics Authority (PSA) has shown that inflation has been consistently rising on a monthly basis since February this year. From January to July 2022, inflation has averaged at 4.7% which, as of now, exceeded the 2-4% target of the Bangko Sentral ng Pilipinas (BSP).
While inflation is a natural part of every economy, it is ideally kept, however, at a relatively slow or moderate pace. Many economists claim that an ideal inflation rate per year is at around 2%, because it would more likely cause buyers to purchase products at present rather than later. Without inflation, buyers may not be encouraged to buy goods immediately believing that their price would not rise. Thus, a low to moderate inflation rate helps the economy in the sense that it keeps cash circulating. Obviously, high inflation is not good because buyers would struggle to purchase the goods they sufficiently need.
Right now, our country—as well as several other countries around the world—are grappling with an unusually higher inflation rate in the past several months. There are various factors that could be blamed such as the rising demand for goods and services while supply production is struggling to keep up.
In a column last July 9, I shared my personal encounters as to the impact of inflation. As an example, one liter of chocolate milk amounts to almost P 100 last month when it used to be below P 80 several months ago. Just last week, I ate barbecue for dinner which already costs P 15 per stick here in Manila. In the past few years, it used to cost around P 8 or P 9 per stick. Basically, inflation has real life consequences that are felt by everyone, especially those who are economically vulnerable.
To make matters worse, the BSP has forecasted that inflation would remain high for the rest of 2022, though it is expected to decrease next year and in 2024. Not surprisingly, more than 12.2 million Filipino families felt poor during the second quarter of 2022, according to a survey from Social Weather Stations or SWS. This is an increase from 10.9 million Filipino families during the first quarter of the year. Only 21% of survey respondents felt not poor based on the same survey released last August 2.
To end this article, I wish to end it by emphasizing what I wrote in my column last month. Inflation is real, and the 6.4% rate as reported by the PSA was made by statisticians and experts—it is something that must be accepted and acknowledged, especially that it is hard data. The first step to solve a problem is to agree that there is indeed a problem. Henceforth, it is imperative for the-powers-that-be to listen to what the data says and strive for data-driven solutions. More importantly, those who are in the upper echelons of society must be sensitive to the struggle of the working class and the poor—inflation is real.