Food crisis looms—Lacson
Prods Duterte to focus on solving economic woes
Senator Panfilo Lacson on Monday urged President Rodrigo Duterte to stop focusing on the war on drugs and focus on addressing the country’s economic problems, including a looming food crisis.“Prices are too high, even for fish,” Lacson said in Filipino. “People, especially the poor, can no longer afford to put even basic food on the table.
We could say that we still don’t have a food crisis, but it’s getting there because the prices of goods are rising.”Warning that inflation may reach 6 percent in September or October, Lacson said the President should leave the drug war to the Philippine National Police and the Philippine Drug Enforcement Agency.“The President’s marching orders are already clear and don’t have to be repeated all the time,” he said. “What we are facing now is a bigger problem—the economy.”Lacson’s call came as Finance Undersecretary Gil Beltran reported that inflation in August rose to 5.9 percent from 5.7 percent in July, mainly due to supply-side pressures.Beltran, who is also the chief economist of the Finance department, said in an economic bulletin that the inflationary momentum was easing, however.“The driver of inflation is largely supply-side challenges which need to be addressed by improving productivity.
In the immediate to medium-term horizon, the country needs to enhance food security by taking advantage of international trade.”In particular, he said, the quantitative restrictions on imports of rice, which accounts for 9.6 percent of the consumer price index, could soon be lifted.Based on the Finance department estimate, the Manila Electric Co. rate per kilowatt-hour for households consuming 200 kW per month in August 2018 rose to P10.22 from P10.19 a month ago and P8.38 a year ago.Meralco’s generation charge per kilowatt-hour for August 2018 also increased to P5.35 from P5.27 a month ago and P3.98 a year ago.Diesel prices per liter in Metro Manila also increased to P46.80 from P46.62 a month ago and P32.56 a year ago.
The government is scheduled to release the August inflation data within the week.Beltran’s August inflation estimate was similar to that of the Bangko Sentral when the regulator projected that inflation likely accelerated to 5.9 percent from 5.7 percent in July, driven by higher food prices due to intermittent weather disturbances during the month.In a statement last Friday, the BSP’s Department of Economic Research projected that inflation in August settled within the range of 5.5 and 6.2 percent.“The central forecast implies a slight deceleration of the month-on-month inflation. Higher price of rice and key food items due to weather disturbances and supply disruptions, increase in gasoline and LPG prices, and slight upward adjustments in electricity rates in Meralco-serviced areas contributed to upward pressures in August,” the department said.“Meanwhile, lower diesel and kerosene prices as well as [a] modestly appreciated peso could partly temper price pressures this month,” it said.
Earlier, private economists said they expected inflation to peak at 5.9 percent in August.In a joint report for the month of August, First Metro Investment Corp. and University of Asia & the Pacific expressed optimism that inflation would decelerate in the succeeding months.“Headline inflation will peak in August given the heavy rains and flooding during the month,” FMIC and UA&P said in the Market Call report for the month.“The saving factor in the third quarter would be normalizing food prices, due to September rice harvests and larger imports and downward trending crude oil prices to well below $70/barrel. Electricity rates should also go down as hydropower plants go full blast during the rainy season,” they said.They said that inflation in September might slow down to 5.2 percent and further to 5 percent in October.
Inflation in July accelerated to a more than five-year high of 5.7 percent from 5.2 percent in June based on the 2012 price index, due mainly to higher food prices. This brought the inflation average in the first seven months to 4.5 percent, well over the target range of 2 to 4 percent this year earlier set by the government.The economists said unless inflation start to slow down and exports begin to move to positive territory, economic growth would continue to remain tepid, around 6.5 percent or less in the third quarter.“… With construction [especially infrastructure] and manufacturing remaining robust, the underlying growth momentum should hold up,” they added.Economic growth in the first half averaged at 6.3 percent, following the lower-than-expected 6 percent in the second quarter, which is significantly slower than the revised 6.6 percent in the first quarter. The first-semester expansion was way below the target range of 7 to 8 percent earlier set by the country’s economic managers for 2018.Rising inflation rate compelled the Bangko Sentral to raise the benchmark interest rates again on Aug. 9 by a rare 50 basis points to 4 percent in a bid to rein in inflation.
The interest rates on the overnight lending and deposit facilities were also increased accordingly. The BSP earlier raised the policy rate by 25 basis points each in May and June 2018.BSP data showed that the last time the Monetary Board raised the policy rate by 50 basis points was in July 2008, when inflation reached 12.2 percent.
It was also the time of the global financial crisis.Bangko Sentral Governor Nestor Espenilla Jr. said there was some risk of inflation exceeding the target in 2019.In a briefing held at the National Press Club two weeks ago, Espenilla said he did not see the inflation rate hitting 6 percent, although he predicted that consumer prices may peak in August or September this year.
He said inflation would continue to be driven by higher oil prices and higher excise taxes might contribute to faster inflation in the coming months.“The August inflation may actually be higher than July. The peak may be in August or September,” Espenilla said. He said if other goods—aside from food and fuel—would also be affected and saw faster price increases, it would be a “red flag for the BSP.”In the House, an opposition lawmaker filed a bill calling for a rollback and a return to a zero excise tax rate on kerosene and diesel, which had gone up as a result of the Tax Reform for Acceleration and Inclusion Law.Marikina Rep. Romero Quimbo filed House Bill 8171 in response to the steadily rising prices of basic goods and services, including fuel.Quimbo’s bill provides for the automatic suspension of the implementation of fuel excise tax increases whenever inflation for a given quarter exceeds the government’s quarterly target.
It is a counterpart to Senate Bill 1798, also known as the “Bawas Presyo Bill” filed by Senator Paolo Benigno Aquino IV.“We recorded an inflation of 5.7 percent in July, with August inflation expected to be at around the same level. Clearly steps have to be taken to bring relief to our people and shield them from future spikes in inflation,” Quimbo said.“During the deliberations on TRAIN 1, I repeatedly stressed that the imposition of excise tax on kerosene and diesel are anti-poor. More than 60 percent of the poorest households in the country depend on kerosene for lighting and cooking while fishermen, PUVs, and small power utility groups in far-flung areas rely heavily on diesel,” Quimbo added.Vice President Leni Robredo on Monday joined calls for the suspension of the excise tax on fuel products.“At the start of the year, we have already felt inflation. [Even] The Department of Finance admitted that they did not expect that inflation [rate] would go up that high,” she said.“From their admission, it is high time to review if [excise] tax is applicable on fuel products,” she added.Robredo, along with the other Liberal Party members, backed the passage of Aquino’s Bawas Presyo bill./
Julito G. Rada and Macon Ramos-Araneta, Maricel V. Cruz
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