Task force on prices

2018-08-23 00:00:00

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Inflation?s pain on poor spurs call for task force
By Cai U. Ordinario & Butch Fernandez ? August 22, 2018
In Bloomberg file photo, a woman browses prices of goods at a local grocery
THE poorest consumers lost as much as P14 per day in the January-to-June period due to the high cost of various commodities, particularly food items, according to Ibon Foundation.
In a forum on Wednesday, Ibon Foundation Executive Director Jose Enrique A. Africa said 50 percent of the poorest households already lost P1,159 to P2,596 in the first six months of the year due to inflation.
Assuming there are 180 days in the first semester of the year, BusinessMirror estimates showed that this translates to a daily income loss of P6.44 to P14.42 per household.
?[Ito ang dahilan] kung bakit umaaray na ang mga tao ngayon. Its because, linggo-linggo, pupunta silang palengke, nararamdaman nila less ang kanilang nabibili ng kanilang hindi tumataas na kita. [(This is the reason) consumer?s pockets are hurting. It?s because, week after week, when they go to the market, they see that their stagnant income can buy fewer items],? Africa said.
Africa said the independent think tank derived its estimates from the data presented by the Department of Finance at the Senate hearings on the Tax Reform for Acceleration and Inclusion (TRAIN) 1. The DOF presented the monthly income per decile per 2018.
The income estimates were deflated by Ibon using the inflation estimates of the Bangko Sentral ng Pilipinas (BSP) over the course of the past few months.
However, the estimates only accounted for the net effect of inflation on household incomes and did not isolate the impact of the weak peso, high oil prices and the TRAIN law.
Nonetheless, this placed a spotlight on the problem of every poor household with the recent spikes in inflation. The poorest 30 percent of households are very sensitive to food-price hikes, since food accounts for about 70 percent of their consumer basket.
Counterinflation task force
Meanwhile, the chairman of the Senate Committee on Economic Affairs prodded the Duterte administration on Wednesday to promptly form a multiagency task force to deal with and quickly mitigate the impact of skyrocketing inflation.
?I think the Department of Finance [DOF] can probably create a task force to address inflation,? said Sen. Sherwin T. Gatchalian, suggesting that it ?can be a multisectoral and multidepartmental task force so that we can come up with a holistic approach to curbing inflation.?
After the last hearing on the inflationary impacts of the Tax Reformation for Acceleration and Inclusion (TRAIN) law, the senator had observed that, while many of the mitigating measures presented by the Duterte administration?s economic cluster could be implemented within 90 days, ?these were a hodgepodge of different measures and different strategies.?
Gatchalian indicated he ?would really like to have a unified approach to this issue, and I think the right agency to do that is [the] Department of Finance, together with the Department of Budget and Management [DBM].?
He recalled that, in the same previous hearing on the TRAIN and inflation, the Bangko Sentral ng Pilipinas informed the committee about the four major drivers for the July 2018 inflation: rising food prices due to weather conditions; higher excise taxes on sweetened beverages and fuel, the scheduled increase in excise tax of tobacco products; higher electricity-generation charges and increase in water rates; and the approved provisional P1 jeepney minimum-fare increase in the National Capital Region and Regions 3 and 4.
Inflation not surprising
Laban Konsyumer Inc. President Victor Mario A. Dimagiba, for his part, said that the Ibon?s estimates on how inflation has gouged the poor households were not at all hard to believe, considering the higher excise taxes slapped on oil products, courtesy of the TRAIN, caused a 7 percent-to-8 percent increase in diesel prices.
Dimagiba, guesting with Ibon?s Africa at the same Lido Cocina forum in Quezon City, said the new excise tax, which is an addition of P2.50 per liter, led to a P40-per-liter diesel price. This represented around a 7-percent increase in pump prices, the same estimate made by the Bureau of Internal Revenue.
He also recalled that the recent price hikes have been extraordinary given that crude oil prices today are lower than in 2012 when inflation averaged only 3.2 percent. Dubai crude prices at that time stood at $109.08 per barrel.
?Pwede sabihin na 40 centavos sa bawat piso ng taas ng oil products ay dahil sa TRAIN. Ang basis namin dyan, sa start ng taon, ang diesel ay P37.15, ?yan ang diesel price dito sa Metro Manila. From P37.15 na diesel sa umpisa ng taon, itong katapusan ng July umabot siya ng P44.65 [This could mean that 40 centavos for every peso increase in oil products is due to TRAIN. Our basis for saying that is, at the start of the year, diesel prices were at P37.15 in Metro Manila. From P37.15 in diesel prices at the start of the year, it increased to P44.65 at the end of July],? Africa said.
Africa added it also does not make economic sense for the country?s economic managers to project a declining trend in inflation even if excise taxes are bound to increase in the coming years.
He said excise tax will increase further to P4.50 in 2019 and P6 in 2020. ?It makes no economic logic [for them to] say they will increase taxes, but prices are going to moderate.?
Weak peso, global prices
Africa conceded, however, that it was also true that inflation has been caused by the depreciation of the peso and the increase in international oil prices?which the government had no control over.
Nonetheless, he said this must not prevent the government from acting on matters that it can control to improve the plight of Filipinos. This can be done through the implementation of taxes, particularly excise taxes.
Dimagiba also urged the government to undertake six measures to strengthen the implementation of the suggested retail price. One of these measures is to deploy full time price monitors, in addition to regular employees.
These price monitors will be deployed in all wet markets and supermarkets in all urban centers in the country and saturate price and supply monitoring. This group of additional price checkers can even include high-school graduates who are able to fill up matrices.
Dimagiba said this was done before when he was still at the Department of Trade and Industry (DTI). Reviving the practice will increase the visibility of the government in retail outlets to discourage profiteering and protect consumers.
??Yung proposal namin na ?yan, ginawa na namin before. Nandun pa naman ?yung mga directors, dati kong mga directors, they know how to do it, may template na ?yun. Maganda ?yun kasi, pag regular manpower, three people, five people, after two hours pagod ka na [Our proposal has been done before. The directors know how to do it, there?s a template for this. This is better because, if you do this using regular manpower, three people, five people, after two hours, you?re already tired],? he said.
Earlier, local economists warned that the worst is still to come for millions of Filipino consumers, as inflation is expected to further increase in the coming months.
This was after the Philippine Statistics Authority disclosed that inflation increased to 5.7 percent in July 2018.
Some economists believe inflation could reach higher than 6 percent, which could force the Central Bank to raise interest rates anew.
Delayed mitigation
The Senate Economic Affairs committee was informed at the hearing about delays in the implementation of various social-mitigation measures, including the 10-percent discount on rice sold by the National Food Authority, the Unconditional Cash Transfer program and the Pantawid Pasada program. The NFA has admitted that it has yet to implement the 10-percent discount because no funding has been given by the DBM.
This prompted Gatchalian to decide to convene more Senate hearings ?as long as inflation is an ongoing concern.?
He added: ?We can see that this year has been very volatile in terms of the fluctuations in prices. As long as inflation is an ongoing concern, we plan to conduct several more hearings. These are the times that we should be very vigilant. These are the times that we should be really on the ball with monitoring, analyzing and enforcing inflation-mitigation measures.?
At the same time, Gatchalian voiced hopes the concerned agencies would be able to come up and present concrete progress in the implementation of these measures at future hearings.

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