BUSINESS leaders in Cebu say the government has not done enough to counter high inflation.
Consumer prices accelerated to 6.7 percent in September from 6.4 percent in August amid the promise of the government to tame inflation.
“The inflation rate proves that despite the assurances of government officials, the measures they have adopted to lower inflation are not enough or are ineffective,” said Cebu Chamber of Commerce and Industry (CCCI) president Antonio Chiu.
Chiu said many factors of inflation are caused by incompetent bureaucrats in government, especially the National Food Authority (NFA).
The Philippine Statistics Authority reported yesterday that consumer prices in September rose by 0.3 percentage points to 6.7 percent from August’s 6.4 percent.
All regions in areas outside the National Capital Region registered higher annual inflation rates in September 2018.
Food prices and transportation costs continue to be the main inflation drivers. The economic managers said supply disruptions caused by the onslaught of Typhoon Ompong in the regions of Ilocos, Cagayan, and Cordillera Autonomous Region have put upward pressures on food prices.
Cebu Business Club president Gordon Alan Joseph said the rising prices of basic goods negates all additional income gained from income tax reforms.
Joseph even believes the rise is more than 6.7 percent.
“I think we should be realistic. From what I have seen, prices have risen more than seven percent across the board, hitting even more than 20 percent increases in food items,” he said.
Like Chiu, Joseph also believes the government seems unable to respond effectively. “It is fair to say the government should be on alert, lest the economy begin to slow down,” he said.
Inflation is the rate at which the general level of prices for goods and services is rising and consequently the purchasing power of currency is falling.
“Inflation is contagious,” said economist Perry Fajardo. He projects inflation to soar in the remaining three months of the year.
Fajardo explained that workers, especially in the rural areas, may demand higher wages, as their current salary is no longer enough to pay for their food and other basic needs.
“Expect wages to increase soon and a vicious cycle will be created where because of rampant and constant price increases, the buying power of the wage earners will never improve. It’s frustrating,” said Joseph.
Moreover, Fajardo said government shouldn’t blame typhoons as they always come every year and it is expected that the country is prepared for them.
But for Steven Yu, vice president of the Mandaue Chamber of Commerce and Industry (MCCI), the high inflation was unexpected because the government had already introduced mitigating measures to keep food prices down.
“It will affect the cost of living of the consuming public. What we are optimistic about is the government is doing something to increase the supply of other essential commodities, which will drive down prices,” Yu said.
Yu maintains a positive stance that inflation will go back to its low levels of three to five percent next year.
Filipino-Cebuano Business Club Inc. president Rey Calooy said many micro, small and medium entrepreneurs (MSMEs) will have difficulty achieving their target sales for the last quarter, as consumers have second thoughts about buying goods for Christmas due to high costs.
Calooy advised consumers “to buy only what is really needed so as not to rub salt into the wounds.”
“The uptrend was primarily brought about by the heavily-weighted food and non-alcoholic beverages index which further accelerated to 9.7 percent in September 2018,” said the PSA.
Non-food inflation moderated to four percent in September from 4.1 percent in the previous month.
Fuel excise tax
Meanwhile, business leaders back the call to suspend the tax hike on fuel next year.
Chiu said that although there is already a mechanism to stop the collection of excise tax when it exceeds a certain threshold, suspending the excise tax on fuel can soften the impact of high prices on goods and services.
The Philippine Chamber of Commerce and Industry has expressed its support for calls to suspend implementation of the fuel excise tax set for next year under the Tax Reform for Acceleration and Inclusion (Train) law.
“We are for that because the increase is so high,” said PCCI president Alegria Sibal-Limjoco, in a report.
Next year, fuel excise tax on gasoline will increase to P9 per liter, diesel to P4.50 per liter, kerosene to P4 per liter and LPG to P2 per kilo.
Yu hopes oil prices will stablize soon. “We cannot control the oil prices because it’s externally-driven. So hopefully, it will correct soon, back to the US$60 to US$70 level.”
“Based on the prevailing circumstances, yes. Automatically after three months, I think the government will need to suspend it if the prices remain. If not, if the prices will correct, we also hope the oil companies will immediately adjust the prices, for the love of country,” he said.
Moreover, Joseph called on the government to stop the increased taxation and liberalize rice and food imports.
In a joint statement yesterday, the government’s economic managers assured the Filipinos that they are working swiftly to temper the rise in the prices of goods and offer relief to those most affected.
Besides the increased level, the team said there are signs of easing, which have boosted their confidence that inflation will taper off by year-end and go back to their target range by early next year.
September’s inflation is slightly lower than the Bangko Sentral’s 6.8 percent forecast and higher than the 6.4 percent forecast of the Department of Finance.
They admitted, however, that global fuel prices remain a concern in the near term, given the gloomy outlook on oil supply and an increasing demand for petroleum products during the winter.
The economic team, composed of the Department of Finance, National Economic and Development Authority and the Department of Budget and Management, also called on the public to stay on guard against profiteers and report those who take advantage of the current situation. With JOB