First, the good news: Inflation slowed to 4.1 percent in June. This is lower than the inflation rate of 4.5 percent in March, April and May, but quicker compared with 2.5 percent in June 2020.
The Bangko Sentral ng Pilipinas, whose primary goal is to ensure monetary stability, is cautiously optimistic that the risks to inflation remain broadly balanced for the rest of the year. The recovery in global demand could bring about supply chain bottlenecks and push commodity prices upward. This expectation is tempered, however, by the emergence of new coronavirus variants that “could delay the easing of lockdown measures and temper prospects for domestic growth,” noted the BSP.
While the BSP is focused on reining-in inflation, it would likely maintain its policy rates in order to continue encouraging businesses to rev up, increase output and stimulate renewed economic activity.
Now, the not-so-good news.
Lower transport cost was the main driver of inflation decline last month, increasing at 9.6 percent compared to 16.5 percent in May. Tricycle fare increase slowed to 17.6 percent from 38.8 percent in May; petroleum and fuels dipped to 21.5 percent from 33 percent.
Food and non-alcoholic beverages, which weigh heavily in the inflation calculus, inched up from 4.6 percent to 4.7 percent even as meat prices stabilized following the African swine flu breakout in the previous quarter. Fish prices increased 8.7 percent from 7.8 percent even while cereals and flour prices stabilized.
Juan dela Cruz does not need to ask the BSP or economic analysts why transport cost has emerged as a major variable in influencing the inflation trajectory.
Recall that when enhanced community quarantine was first imposed, public transport was severely curtailed to prevent the spread of the coronavirus. Even as the economy reopened gradually, social distancing was enforced, thereby limiting further available public transportation capacity.
Even as quarantine measures have been relaxed, it is estimated that available public transportation is less than 50 percent of authorized public utility vehicles during the pre-pandemic period. Businesses depend on workers that commute daily. Enterprises employing workers who are hobbled by exhausting daily commutes would not be optimally productive and could even eventually fold up.
When the Employers Confederation of the Philippines (ECOP) held its national conference last month, it flagged the severity of the public transport crisis and reported that its members have taken the initiative to provide employee shuttle services.
This is an additional burden that the country could ill afford while it is dealing with a national health emergency and struggling with a deep recession. Service contracting which was provided a P3 billion budget by the just-expired Bayanihan 2 Act and a P3 billion subsidy under the 2021 national budget needs to be expanded.
As the Department of Transportation (DOTr) has signified its solidarity with the business community in boosting economic recovery efforts, the citizenry expects that decisive steps will be taken to increase the availability of public transport facilities.