High inflation doesn’t bother Duterte and company

Last month, inflation in the Philippines hit a five-year high of 5.7 percent.

Ordinarily, a country’s leadership would be concerned about such a situation. Some would even be alarmed.

Not the Duterte administration, though. As far as the government is concerned, inflation is a fact of life that everyone should live with.

As long as President Duterte remains popular, all is well. So goes the thinking of everyone in his administration. Sadly, this includes his Cabinet secretaries tasked with making sure the economy moves forward without too many hitches.

They are comparing the heightened inflation and the tax law that caused it as a bitter medicine that needs to be swallowed in order for the Philippine economy to get better.

Well, excuse me. Before Mr. Duterte and his apostles took over the reins of government, the Philippine economy was doing just fine, thank you. In fact, it was considered one of the best performing not only in the region, but the world.

This is no PR claim. It is a fact that can be verified by reviewing the data of how well the country was doing globally prior to the elevation of the mayor of Davao City to Philippine president.

What’s happening today is known as cost-push inflation, caused by the higher cost of manufacturing goods which is then passed on to consumers.

Some may paint a rosy picture of the economy and say that inflation today is actually spurred by higher demand for all kinds of goods and services because Filipino consumers are generally better off.

This is simply not true.

To be fair, some inflation can actually be good as it could push economic growth. This deliberate inflation is adopted by various countries with different rates of success. It is extremely doubtful if this tactic will work in the Philippines.

Thus, it is already a given that the government will miss its inflation target for 2018, pegged at between two to four percent.

It goes without saying that the masses are the hardest hit by the rise in prices.

One example should suffice. Previously, the minimum fare was P8. This is what jeepney drivers charged their passengers for short distances. Now the minimum fare is P9.

So is a P1 hike such a big deal?

Yes it is, considering that the vast majority of Filipinos take the jeep to work, or go to school, or head anywhere for that matter.

Simple math tells us that a P1 increase over the previous P8 is actually a 12.5 percent increase. This is way over the 5.7 percent increase posted last month.

We can disregard this dramatic increases in the cost of cigarettes and other tobacco products since they do cause cancer. But it does not help the country’s tobacco farmers in the northern part of Luzon who still depend on the plant for their livelihood.

Soft drinks (AKA soda) are another matter. While considered a luxury product, Filipinos remain avid consumers of Coke and Pepsi and all other carbonated and non-carbonated drinks which contain loads of sugar.

Also, sugar remains one of the country’s most important industries with hundreds of thousands of families dependent on the crop to survive.

I am not alone in blaming the Duterte administration-sponsored Train Law for being the primary cause of the ongoing high inflation. Sadly, the government is now pushing for a Train 2 law, which would cover higher taxes on more goods and services.

Sooner or later, the high taxes imposed by the current regime will reach a tipping point when even the kanto boys who are among the most avid of Dutertards will call for drastic action against this government.

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