BIZ OP-ED: EDITORIAL- Pushing on a string – By The Editorial Board –


Timing is everything. Whether the activity requires marrying someone, buying a house for the first time or importing commodities, knowing when to act and how to do it is of utmost importance. That is why the choice of people in key government positions often spells the difference between how the main man in Malacañang and his official family are perceived by the general public. Take the issue of rice, for example.

In November last year when retail well-milled rice costs only P42.17 a kilo, the same rice costs P48.93 a kilo as of latest, based on data from the Philippine Statistics Authority.

Retail regular milled rice also in November last year cost only P35.60 a kilo versus P43.13 a kilo at the moment.

A kilo of the most important staple among Filipinos posted a price escalation of 16 percent in the former and 21 percent in the other. It is safe to say the consumers who can still afford to pay for the commodity at these prices each took a hit as the price ramped up.

However, grudgingly the more affluent buyer or the less well-off patron dip into their pockets, they both paid the price and cooked the dang thing.

In that same time frame, headline inflation, or the rate of change in prices, similarly escalated from 3 percent in November last year to 6.4 percent in August this year. The bulk of the escalation, we already know, had been driven by food inflation. We also know that more than half of the consumer price index, that typical basket of commodities and goods that an ordinary Filipino regularly purchases, consists of various food items. In other words, that same basket that only last year can be purchased for only P1 now costs more than P113. If that is not shameful, we don’t know what is.

Why rice and quite a number of commodities or goods are expensive is a matter of public debate at the moment. Everyone has an explanation and there is an ongoing circus as to how to contain the escalation. There had better be because we all have to eat, people. You cannot feed more than 103 million of us with just cake.




But levity aside, there is more than a casual link between the numbers cited above. As the price of a kilo of rice proved buoyant, so did inflation. And then it got really interesting as the headline numbers pushed past the roof. Economists of all stripes have a term for it: above-target inflation. For millions of the less well-off, it means dipping into the pockets, finding not enough money in it, going back to borrow from a friend and purchasing the thing on credit.

We hesitate to say it but our so-called economic managers failed us. The proof is the suggested retail price that one sees when picking up something from the talipapa (market).

No one acted when the numbers began pushing north of expensive in November when the bozo from the National Food Authority Council trumpeted rice buffers sufficient only for 1.7 days, way lower than the two-week buffer normally required. The men and women of the Bangko Sentral ng Pilipinas (BSP) from then on had their hands full fielding monetary countermeasures against an essentially supply-driven phenomenon. They had to raise interest rates to ensure prices don’t fly and we all know prices still fly. Whenever the BSP raises its policy rates, everyone gets hit, whether one is a saver or a spender. Economists have a phrase, no, entire sentences for it: Interest rates are a blunt instrument. You get hit with it regardless.

Prices respond only so much to monetary measures. The monetary authorities put in place particular measures now but you can feel their impact only 18 to 24 months down the line.

That’s long enough for the hungry to turn up dead.

Former BSP Governor Amando M. Tetangco Jr. put it into words like this: Monetary policy crafting is like pushing things in the desired direction with a string. It gets the job done but only in concert with others in government. We see the string now in the hands of incumbent BSP chief Nestor A. Espenilla Jr. Hardly the others at the end of that string.

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