THE Philippines' increasing inflation rate has made headlines in the past few months.
In September, the country's inflation rate hit 6.7 percent, according to the Philippine Statistics Authority (PSA). It is higher compared to the 6.4 percent inflation recorded in August.
Last month's inflation rate is considered the fastest in nine years since March 2009, pegged at 6.6 percent.
READ: Inflation moves faster at 6.7% in September
The government's economic team pointed out that prices of food and non-alcoholic beverages are the "main inflation drivers," adding that supply disruptions due to the effects of Typhoon Ompong (Mangkhut) "put upward pressures on food prices."
The economic team, composed of the National Economic and Development Authority, Department of Finance, and Department of Budget and Management, also said that global fuel prices contributed to the faster inflation in the country.
Inflation in a nutshell
But do Filipinos truly understand what inflation is and how it affects them?
Inflation is the rate in which prices of goods and services purchased by consumers increase. Economic analysts in the country measure it by looking into the consumer price index (CPI), a list of commonly-purchased goods or "basket of goods."
The "basket of goods" contains food products, alcoholic and non-alcoholic beverages, tobacco, clothing and footwear, housing (furnishing, equipment, and maintenance), water, electricity, gas and other fuels, health, transportation, communication, recreation and culture, education, restaurant, miscellaneous goods, and services.
The value of money is dictated by inflation, as the price of goods and services increases, the value of money also decreases.
Inflation and the government
According to the country's Official Gazette, the government can also affect inflation through the circulation of money due to the "complex relationship between the supply of money and the prices of goods and services."
The government's imposition of additional or higher taxes also affects inflation as it triggers the prices of goods to shoot up.
On December 19, 2017, President Rodrigo Duterte signed the Tax Reform for Acceleration and Inclusion (Train) law, and since January 2018, inflation has been consistently going up.
READ: Tax reform law goes full steam amid high inflation
Regulatory bodies of the government, however, can impose limits on price increases to protect consumers from unreasonable and extreme price surges.
Republic Act 7581, or the Price Act of the Philippines, states that price freeze automatically takes effect in areas placed under state of calamity. Violators may be imprisoned from one year to 10 years with a fine of P5,000 to P1 million.
Records from PSA show that the average inflation rate in the Philippines in 2013 is at 2.6 percent, 2014 at 3.6 percent, 2015 at 0.7 percent, 2016 at 1.3 percent, 2016 at 2.9 percent, and 5 percent for the first nine months of 2018.
Is it good or bad?
Traders and manufacturers are more likely to invest when they see prices are rising. This move enables them to expand their businesses, which then leads to creation of more jobs.
But the government wants a manageable and steady inflation rate. The challenge, however, is that for nine straight months, inflation continues to spike, and the most affected are those who are not capable of keeping up with the sudden change in prices of basic commodities and services.
The economic managers of the country, meanwhile, continue to assure the public that the economy remain "robust and resilient." They have projected that inflation will continue to rise before it slows down by the end of the year.
Sources: Official Gazzete of the Republic of the Philippines, Philippine Statistics Authority, National Economic and Development Authority, Department of Finance, Department of Budget and Management