Winter is coming! Poor Pinoys to suffer most from high inflation in next 12 months; poverty reduction gains will be wiped out
Poor Filipinos are bearing the brunt of the highest inflation rate in nearly a decade and the economic adviser of Speaker Gloria Macapagal-Arroyo warned of more pain in the next 12 months.
Albay Rep. Joey Salceda does not expect inflation to ease any time soon in the next 12 months which he warned could push more Filipinos back below the poverty line and spur mor edemand for higher wages.
“August inflation spikes to 6.4 percent which was higher than market expectations.But what is more worrisome is that it would reverse gains in poverty reduction and hunger mitigation since the main culprit is food inflation which surged by 8.5 percent. Thus the inflation of the poor (lowest 30 percent of the population) is estimated at 7.4 percent,” said Salceda in a statement.
Aside from the country’s economic managers doing their best impersonation of a carcass, Salceda cited five factors for the rusge in inflation:
1) Supply difficulties due to two weeks of continuous rains especially in the Luzon food basket principally impacting vegetables
2) Unabated increases in rice prices with weak National Food Authority intervention
3) Meat prices especially chicken have flown higher
4) Fish prices have continued their northward migration
5) Increases in pump prices due to peso weakness and higher global oil prices
6) Peso weakness from 53 to the US dollar in July to 53.40 in August (now 53.55 in September)
“A return to four percent inflation within 2018 is no longer possible especially we are now into the world’s longest Christmas season characterized by higher consumer spending. Returning to four percent is more likely to be achieved by August next year,” said Salceda.
“The main risk to this outlook which is already unfolding is that it would transform into a more permanent inflation given the rising demand for wage adjustments, for example Davao which approved a P56 per day hike – P26 in 2018 and another P30 in Feb. 2019 (all within 5 months). This poses a more problematic context to policymakers.Were quite loud in slaying the inflation monster with draconian measures so they would not show up as widespread demand for higher wages given the sympathy from public sector wage adjustments at P154 billion for military and uniformed personnel and P54 billion for civil servants for the last tranche of SSL (Salary Standardization Law).
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