MANILA – The approaching holiday season is traditionally the happiest time of the year for Filipinos, but Christmas of 2018 and New Year 2019 will not be as joyful compared to previous years.
This is because inflation has not abated, but has in fact worsened as the country enters the last two months of the year.
Christmas spending usually goes into overdrive in the Philippines immediately after the Halloween/ All Saints Day/All Souls Day unofficial three-day holiday which takes place this week. Officially, it is only Nov. 1 and 2 which are declared non-working days by the government, as is the case this year.
On the first day of November when most Filipinos visit the graves of their departed loved ones, however, commuters face the shock of another increase, with the minimum fare rising to P10 from the previous P9, or an 11 percent increase.
The poorest of the poor who represent the bottom 30 percent of all Filipino households felt inflation pegged at 8 percent for August, based on data from the Philippine Statistics Authority (PSA). For the same period last year, the inflation rate was a more manageable 3 percent.
The 8 percent inflation rate is for goods and services that the bottom 30 percent avail of. Nationwide, the rate for September was 6.7 percent.
Economists point out that once inflation hits double digits (starting at 10 percent), a country’s economy is considered to be in trouble. This level can be hit at the start of the new year due to expected heavy election spending by most candidates, creating inflationary pressure.
This month, the BangkoSentral ng Pilipinas attributed the current inflation rate to rising food and energy prices.
According to the PSA, food inflation rose by 7.8 percent in August, substantially higher than the 6.9 percent pegged in July and the 3 percent posted during the same month in 2017.
The PSA reported higher annual markups for all food groups except corn, which registered a slower annual rise of 3 percent.
The food inflation was felt by the lowest 30 percent of all Filipino households.
The figure was computed by adjusting the weights of commodity groups in the consumer price index (CPI) to reflect the typical budget of the poorest Filipino households.
The poorest households in Metro Manila felt inflation at 8.3 percent, higher than the 4.7 percent recorded in August 2017.
The consistently high inflation has forced economic managers to revise the country’s outlook .
They previously saw gross domestic product (GDP) reaching 7 percent to 8 percent. The upper end of the revised target is now at 6.9 percent
The government recently adjusted the inflation forecast for this year to a range of 4.8 percent to 5.2 percent, from the previous 2 percent to 4 percent. The inflation forecast for 2019 was also adjusted to 3 percent to 4 percent.
In all likelihood, this forecast will be revised upwards due to the preponderance of warning signals.
BSP Officer-in-Charge Maria AlmasaraTuaño Amador said the government may still miss the inflation target for 2019, but could revert quickly with the timely implementation of non-monetary measures such as rice tariffication.
She identified the trade war between the US and China along with higher global oil prices as strong headwinds from the global scene which would continue to affect domestic prices.
Meanwhile, the Philippines’ wider current account deficit and the bearish mood in the local stock exchange also continue to negatively affect the economy.
Thus, for a large segment of the population, the Christmas and New Year holiday season will be a matter of surviving instead of merry making.