Tackling inflation

Published July 12, 2022, 12:05 AM

by Former Senator Atty. Joey D. Lina


Former Senator
Atty. Joey Lina

Controlling the soaring prices of food and transport fuel costs is indisputably a gut issue that worries most Filipinos especially the poor.

The country’s headline inflation rate of 6.1 percent for June 2022 reported recently by the Philippine Statistics Authority apparently bothered President Ferdinand Marcos, Jr. As he expressed disagreement over the latest figure, he understandably tried to shift focus on a much lower inflation number.

“The President’s disbelief at the 6.1 percent June 2022 inflation rate figure was misunderstood. He was referring to it as a full-year figure when in fact, the year-to-date, meaning January to June average inflation rate is actually 4.4 percent,” clarified Finance Secretary Benjamin Diokno.

But whether the focus is on the higher or lower figure of inflation rate, there’s no doubt that higher prices are taking its toll on consumers. With the latest headline inflation rate surging year on year from 5.4 percent in May 2022 and 3.7 percent a year ago, the jobless and those with fixed income are getting desperate.

But the President is certainly right on the current roots of inflation: “Much of our inflation is actually imported inflation. It is imported because it is the inflation on the products that have suffered inflation that we import… When we analyze, we have to make those categorical differences so that we’ll better understand really what the situation.”

Understanding the global impact of inflation is certainly vital. Inflation is now a worldwide phenomenon mainly due to the raging Russia-Ukraine war that disrupted the global supply chain and raised fuel prices. The West is waging an economic war against Russia with massive sanctions particularly on Russian oil and gas sales.

But imposing absolute sanctions against all Russian energy seems improbable simply because banning altogether the sale of Russian energy would reduce supply in the world market, which would drive fuel prices even more.

With soaring energy prices and with Russia being an energy economy fundamentally, Russia continues to rake in billions of dollars from oil and gas sales. Bloomberg even projects that Russia “will make considerably more revenue from oil and gas than it did before but the war, around $285 billion in 2022 compared to $236 billion in 2021.”

As the Russia-Ukraine war rages with still no end in sight, and with massive economic sanctions against Russia clearly not working as expected, many analysts see a continuing global inflation crisis. And such inflation would spell more suffering for developing countries like the Philippines.

“Rising food prices have a greater impact on people in low- and middle-income countries since they spend a larger share of their income on food than people in high-income countries,” warned the World Bank in its report, Rising food insecurity in 2022, released last June 22.

The WB further said that “the war in Ukraine has altered global patterns of trade, production, and consumption of commodities in ways that will keep prices at historically high levels through the end of 2024 exacerbating food insecurity and inflation.”

Thus, tackling the impact of global inflation on our country is of paramount importance. While there seems to be no quick fix in sight to avert the WB’s bleak projection for the next two years, government is not entirely helpless to combat “imported inflation” sooner rather than later.

Beyond the necessary actions to combat inflation like adjusting interest rates and bank reserve requirements to decrease or increase money supply, and other monetary policies by the Bangko Sentral ng Pilipinas, efforts by both national government and local government units are vital.

I’ve often said that many solutions to national problems are local. Concerted efforts of both national agencies and LGUs would certainly go a long way in battling inflation and softening its impact.

LGUs can do a lot to mobilize people to increase productivity leading to lower food prices. Establishing and intensifying the Food Always In The Home (FAITH) program that I created in 1995 in Laguna when I was governor would help tremendously. Such program, eventually adopted by the National Nutrition Council, enabled people to produce clean nutritious food in their backyards, thereby reducing in half food costs.

Also, LGUs need to activate and strengthen local price monitoring councils, go after hoarders, profiteers, and other unscrupulous traders, especially those involved in cartels behind rising prices of basic food items.

On soaring fuel costs, more LGUs encouraging biking would save a lot on transport costs. So would the use of more electric and hybrid energy-efficient vehicles including e-bikes. Adopting more green energy solutions would drastically reduce our reliance on imported fuel.

Indeed, much more can be done to combat the impact of global inflation. Government, national and local, ought to do its utmost in quickly addressing a gut issue of grave concern to millions struggling to cope with hard times.

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