AFTER a year of inflation – rising prices to housewives and other ordinary consumers – which reached a near-10-year high of 6.7 percent in October, it went down to 6 percent in November.
Market prices had begun rising last January, blamed by the government’s economic officials on increasing global oil prices and a falling peso value. But it was also in January that the new TRAIN taxes went into effect. The most critical of the new taxes was a tariff of P2 per liter on diesel imports where there had been none before. As diesel fuels the transportation of all consumer goods from farms and ports to markets, the additional costs were bound to be included in consumer prices.
The government recently responded with a series of moves, including an announcement that another P2 tariff on diesel scheduled for 2019 would be suspended. But then global oil prices eased this month and the government decided to go ahead with the P2 tariff increase. Malacañang announced that the Cabinet had approved the economic managers’ recommendation that the additional tariff be imposed as scheduled.
We hope that this decision will not start a new period of inflation this January. We are only now just beginning to recover from the long period of rising prices, that was halted in November by a drop in global oil prices along with swift government action to bring rice prices down with “unimpeded” importations.
The Bangko Sentral ng Pilipinas (BSP) released last week the results of its fourth-quarter survey on business and consumer confidence. Despite the expected higher consumer demand in the Christmas season, the Business Confidence Index was down to 27.2 percent in the fourth quarter, from 30.1 percent in the third quarter.
The Consumer Confidence Index was worse, a negative-22.5 percent in the fourth quarter, down from negative-7.1 percent in the previous quarter. The Bangko Sentral said consumers’ very low optimism was due to high commodity prices, low incomes, increase in household expenses, and an upsurge in unemployment.
Both business and consumer sectors expect the low confidence levels to continue in the next three months. Consumers expect prices to rise further, while businessmen see the usual slowdown after the holiday season.
The national government should keep these BSP survey findings in mind as it draws up its plans for the coming year, most especially plans that may impact on prices and other concerns of common folk.
