Keep close watch on market prices

Published July 6, 2020, 10:38 PM

by Manila Bulletin

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.