AT a time when there is so much bad news related to the COVID-19 pandemic here and around the world, it is good to hear from Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno that inflation in the country is expected to be below the 2 percent level in the next two quarters of the year.
“We expect inflation to be less than 2 percent in the third and fourth quarter of the year because of the collapse of oil prices and the adverse impact of the coronavirus pandemic on the domestic and global economy,” he said last Friday.
Inflation to economists is market prices to housewives. Two years ago, in 2018, high inflation hit hard at all Filipino families due to a combination of surging global oil prices, a new P2.50 tariff on imported diesel under the newly enacted Tax Reform for Acceleration and Inclusion (TRAIN) Law, and so many producers and traders taking advantage of the situation to raise prices.
By June, 2018, the inflation rate had reached 4.5 percent. By July, it was 5.7 percent; by August, 6.4 percent; and by September, 6.7 percent. The government then managed to bring down prices with massive importations under the Rice Tariffication Law which ended all quantitative restrictions on rice imports.
That 6.7 percent inflation rate in September, 2018, is today just a bad memory for Filipino consumers. Today, the rate stands at only 2.1 percent for the month of May, at a time when the national economy is down due to the COVID-19 pandemic.
Governor Diokno said the country’s inflation rate has been dropping from 2.9 percent in January, to 2.6 percent in February, to 2.5 percent in March, to 2.2 percent in April, and now to 2.1 percent in May. This is the good news as far as ordinary consumers are concerned.
The domestic economy, he said, is now projected to recover from the COVID-19 crisis, following a U-shaped quarterly recovery graph. “Growth is expected to accelerate back to its growth potential in 2021 once the impact of government money support measures gain traction,” he said.
