With inflation hitting a nine-year high, the peso falling to a record low and share prices tumbling, which factors are being blamed by the administration? Malacañang points to strong demand – an explanation that also psyches the people to even higher prices ahead with the start of the Christmas season.
Meanwhile, President Duterte, returning to the country from visits to Israel and Jordan, blamed the tariffs imposed by his US counterpart Donald Trump amid a trade war with China.
Washington has been silent on the statement of President Duterte. But his own finance chief had earlier said the Philippines was “sort of insulated” from the impact of the US-China trade war. Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. also attributed the inflation surge to “food supply shocks” as the Philippine Statistics Authority reported that food and non-alcoholic beverages accounted for the largest component of the inflation rate hike.
Economic managers have blamed everything except the Tax Reform for Acceleration and Inclusion, which slapped a hefty excise tax on fuel, raising transport and electricity costs. The fuel tax under TRAIN was compounded by rising world crude prices and the weakening peso.
Instead of considering suggestions from lawmakers and even other economists from outside the government to suspend at least certain provisions of the TRAIN law, however, the government is pushing Congress to pass the second phase of tax reforms or TRAIN 2, now with the new acronym TRABAHO or jobs, for Tax Reform for Attracting Better and High Quality Opportunities. The government has been warned about possible business shutdowns and consequent job losses due to TRABAHO, but so far, the administration is standing firm not just on TRAIN 2 but also on not touching a single provision of the first phase of TRAIN.
Filipino consumers are being run over by the inflation train. This is more destabilizing than any political maneuvering, real or imagined, against the government.