NO, and yes.
No, since almost all countries in the world have seen their inflation – the rate at which prices increase over a given period – worsening since 2020, with the global average rising to 4.7 percent in 2021, to 7.4 percent so far this year. This has been initially due to the disruption in economic activity due to the impact of the Covid-19 epidemic that started in 2021. It has been a perfect storm, with so many factors involved.
To simplify things though:
Blame it on Russia’s invasion of Ukraine, which was like a meteor falling on the global sea, creating tsunami waves in different forms such as disruptions in energy and food supplies. The richest countries’ defensive actions not just to contain their local inflation but prepare for war with Russia worsened the situation. The US for example steeply raised its local interest rates, but this strengthened its dollar, which in our case drove down the international value of our peso, making our imports – either for manufacturing inputs or direct consumption—expensive.
But this doesn’t explain the fact that our inflation rate, at November at 8 percent, is highest in the region, next only to Laos, one of the poorest countries in Asia which reported a 39 percent inflation. Our 8 percent inflation is double that of Malaysia’s 4 percent, significantly higher than Indonesia’s 5.4 percent and Vietnam’s 4.7 percent
What is worrying is that, as shown in the accompanying table, our inflation has worsened from 7.7 percent in October to last month’s 8 percent — the highest in 14 years, or since November 2008 at the height of the 2008-2009 global recession. There has been an upward trend monthly from the 6.4 percent in July at the start of President Ferdinand Marcos Jr.’s administration.
This continuous rise is in contrast to the decline in inflation in most countries in the region. Thailand’s inflation slowed down from 6 percent to 5.6 percent from October to November; Indonesia, from 5.7 to 5.4 percent, and Malaysia’s from 4.5 percent to 4 percent.
I can only attribute the continued rise in our inflation rate – compared to our neighbors which are facing the same global factors — to Marcos’ lackadaisical response to inflation. Yes, he is to some extent to be blamed for the 8 percent inflation reported last month
He had revealed his mentality with regard to the inflation problem at the very start of his administration when he even cast doubt on the Philippine Statistics Authority’s report that inflation had hit 6.1 percent in June. ”I have to disagree with that number,” he said, as if there could be a debate on a question of fact. He even told the media then: “The forces that have pushed commodity prices up are beyond our control. Much of our inflation is imported; it’s inflation on products that have suffered inflation that we import. Sumama inflation nila sa atin (Their inflation accompanied ours).”
Marcos has been the secretary of the agriculture department since he assumed the presidency. He has done this, as he claimed, to emphasize that his administration is putting priority on efficient food production, to ensure stable supply at prices affordable to the masses.
As often happens, theory doesn’t match practice, and the agriculture department in effect has been a leaderless organization. With every official there waiting for Marcos’ instructions, the department has had no real, major initiatives to address the rise in food prices — which in fact has been the main reason for our soaring inflation rate.
Marcos being agriculture secretary obviously was crucial in asking Congress for an unprecedented 40 percent increase in its budget for next year. But will the agriculture department in its demoralized condition be able to spend that money efficiently and quickly to reduce food prices?
It seems Marcos and the agriculture department’s main response to addressing the rise in food prices has been to take a page from his father’s programs, which is the Kadiwa idea of getting producers to sell to retailers directly, to remove traders’ margins.
This idea didn’t work during his father’s time, it won’t work today. Because our agricultural sector has mainly been a small-scale industry, traders provide before-harvest loans for farm-to-market transport costs, for which they extract their profits. A new, major phenomenon that didn’t exist during the elder Marcos’ time is the emergence of big supermarkets with their “wet-market” sections with of course their own trading margins.
How can mom-and-pop Kadiwa outlets compete with the large traders sector and the supermarkets? Kadiwa stores, by one estimate, don’t even account for 1 percent of retail sales of agricultural products.
It is no surprise then that our soaring inflation rate has been mainly due to the rise in food prices, which rose 10 percent in November, compared to a year ago, one of the highest rates in the post-EDSA period. The biggest rises were for commodities the agriculture department could have the most influence on, among them: corn, 27 percent; sugar, 38 percent; vegetables, 26 percent; and meat, 9 percent. (See accompanying table)
Rise in Food Prices (%) Y-on-Y Nov. 2022
|Flour and flour-based||10.3|
|Fish and Other Seafood||8.3|
|Dairy Products, and Eggs||9.4|
|Oils and Fats||19.8|
|Fruits and Nuts||6.2|
|Vegetables and Tubers||25.8|
|Sugar and sugar products||38|
|Ready-Made Food etc.||8.9|
What can be done? Leonardo Montemayor, longtime chairman of the Federation of Free Farmers, says: “A lot of things could be done by the agri department – such as seed dispersal for vegetables, efficient subsidized fuel to fishermen. While these may seem small things that won’t lower overnight food prices, if they’re all done, in a coordinated manner, these will have an impact. But right now, the agriculture department is still waiting for signals from the agri secretary on what to do.”
Debate as much as you want whether Marcos must share part of the blame for our soaring inflation, one thing is crystal clear to me: His administration doesn’t have a clear and detailed strategy to contain inflation. I find this scary. There’s a point at which inflation reaches — 10 percent according to some economists — at which it gets out of hand, and can be contained only by the harshest means such as astronomical interest rates.
Inflation would be Marcos’ scariest nightmare. It wasn’t the Filipinos’ desire for democracy or justice for the killing of opposition leader Benigno Aquino, Jr. that eventually led to his father’s ouster.
It was inflation. Although due to reasons so different from those operating today, it crept up from 10 percent in 1979 to an unbelievable 50 percent in 1984. Tama na, sobra na really referred to rising prices at the time.
He should get the Congress he controls to stop working on the silliness called Maharlika Wealth Fund and should instead draft a comprehensive anti-inflation program, in the way President Gloria Macapagal-Arroyo formulated and executed her government’s Economic Resiliency Plan in 2008
This enabled the country to weather the 2008-2009 global recession. and break the back of inflation fast, from 8.3 percent in 2008 to 4.2 percent the succeeding year.