The fact that inflation did not go up in October is not bad news, all right. But neither is it “good news” as some people want to put it.
In the official economic data released by the Philippine Statistics Authority on Tuesday, headline inflation stood unchanged at 6.7 percent in October from where it was in September, still at a nine-year high.
We understand that there is a valid reason to present the government’s viewpoint on a sensitive issue like inflation in a positive way. Policymakers and those who communicate on their behalf, however, should focus as much, if not more, of their message on what is being done to curb inflation. This is especially the case because October’s result clearly shows that very little headway is being made so far.
The October headline inflation did fall within the broad 6.2 to 7.0 percent estimate of the Bangko Sentral ng Pilipinas (BSP), and matched the average forecast among outside analysts. But it still overshot the Department of Finance’s (DoF) projection of 6.5 percent, and more significantly, was higher than public expectations as well.
What drove public expectations lower was an aggressive response by the government after inflation hit a high of 6.7 percent in September, as well as anecdotal evidence of easing prices throughout the month of October.
For one, on September 21, President Rodrigo Duterte signed several measures aimed at easing prices and supply of agricultural products. The following month saw no repeats of alarming stories of consumers queuing for hours to buy rice, or exorbitant prices for some products like the P1,500 per kilo chili peppers seen in September. Likewise, oil prices moderated during the month, even resulting in some modest reductions in local fuel prices.
In short, all the signs were pointing toward at least a slight slowing of inflation in October — the DoF, after all, certainly believed that would be the case — but in reality, inflation actually increased slightly. Month-on-month, prices increased 0.3 percent from September, which to be fair is a much smaller monthly increase than in previous months, but is still a move in the wrong direction.
And in spite of optimism expressed by policymakers that inflation will ease in the coming months, there are clear signs of further inflationary pressure ahead: Damage to agriculture from recent typhoons, as well as the challenge to the country’s ability to maintain sufficient food supplies and reasonable prices in the absence of new rice import deals with overseas suppliers such as Thailand and Vietnam.
Outside the Philippines, other causes for concern are the uncertainty about the implications of mixed-results US midterm election to the ongoing US-China trade war, and the potential for further volatility in oil prices due to the re-imposition of US sanctions on Iran.
It is appropriate and, indeed, sensible for the government to avoid sending a pessimistic message to the public about inflation. Stoking public concerns will only reduce consumer confidence, and may actually even make inflation worse. The government is taking some steps against inflation, and while the results are not yet what we may have hoped for, it is not wrong to emphasize that things could be worse if no action was taken.
But being positive does not mean being unreasonably optimistic or misrepresenting reality, especially when that reality is reflected in hard statistics, as well as the perceptions of every Filipino.
Acknowledging that inflation is still unacceptably high and that much more needs to be done and more quickly in order to control the rise in prices will not be seen as an admittance of failure on the government’s part, but rather a reassurance that our leaders have a clear view of the problem and a strategy to fix it. That message, rather than “good news,” is what millions of Filipinos still concerned about making ends meet need to hear, and what will encourage them to continue to strongly support the government.