For four months starting in February this year, as the coronavirus started affecting business and industry in the Philippines and some other countries, notably China and Singapore, inflation – market prices – in the Philippines eased to a low of 2.1 percent in May.
Last month, the inflation rate rose slightly to 2.2 percent as economic activity in the country slowly returned. Another reason was the slight increase in the prices of diesel, gasoline, and other fuels that power economic activities. Economists expect inflation to remain about this level – 2.1 to 2.2 percent – for the rest of this year.
We hope that they are right about the inflation rate remaining low in the coming months. It would be most unfortunate if, on top of the government restrictions on economic activity and the movement of people, the people will suffer higher prices for their food and other basic needs.
We still remember the general misery suffered by the people when the inflation rate rose steadily in 2018 – hitting 4.5 percent in May, rising to 5.7 percent in July, reaching 6.7 percent in September, before it began to go down to save December from what would have been a miserable holiday season.
A big part of that 6.7 inflation rate in September, 2018, was a 7.2 percent increase in the prices of food and non-alcoholic beverages. That September inflation rate of 6.7 percent was the worst in the country since a 7.2 percent rate in January, 2009.
Today, economists are closely watching the market and the inflation rate has been steadily going down in the last four months, as many business activities closed down and people were told to stay home to keep the cororonavirus from spreading.
The restrictions are now being gradually lifted as the virus is brought under control. After four months of restrictions since Metro Manila and Luzon were placed under the strict lockdown of Enhanced Community Quarantine (ECQ), followed by gradual easing of restrictions in succeeding months, we hope to graduate to General Community Quarantine (GCQ) by July 16. That would mean the end of most restrictions and renewal of nearly all economic activity.
We hope that with all these moves to return to normal, we will not also be returning to that “other normal” – high inflation or high market prices. The rate is now a low 2.1 percent and may rise to 2.3 percent because of renewing economic activity.
We look to the government to keep a close watch on prices in these coming months. We must not have a repeat of that period in 2018 when the inflation rate hit 6.7 percent because, according to the government itself, some local businessmen took advantage of the rising global oil prices to raise market prices to undue heights all around.
Credit belongs to : www.mb.com.ph