EDITORIAL - Inflation, shrinkflation

These days, people are talking not only about more contagious COVID subvariants but also high inflation and its “variants” such as stagflation. As purchasing power and the sizes or portions of staples such as pan de sal shrink, Filipinos have coined the terms “shrinkflation” and “skimpflation.”

The problems give greater urgency for fiscal prudence and efficient management all around, from national agencies to local government units that now have a greater share of national revenues.

The new government faces enormous challenges, a number of them beyond its control. These include surging fuel prices due to Russia’s invasion of Ukraine and the aggressive moves of the US Federal Reserve to tame inflation, which have weakened the peso and prompted the Bangko Sentral ng Pilipinas to raise interest rates at the risk of dampening economic growth.

Mobility restrictions have been mostly lifted and growth rates indicate that the economy is recovering from the pandemic. Growth, however, has slowed down due to the surging costs of fuel and basic commodities. The government has limited room for response, with its debt rising to a record high P12.79 trillion as of end-June.

In a survey taken by Social Weather Stations from June 26 to 29, the number of Filipinos rating their families as poor increased to 12.2 million from 10.9 million in April. That’s about 48 percent of families rating themselves as poor. The number of Filipinos who considered their families “food poor” – those who rated themselves as poor based on the food they eat – also increased from 31 percent to 34, or from 7.9 million to 8.7 million.

And the numbers are expected to grow, as headline inflation rose further in July to 6.4 percent, driven by heavily weighted food and beverages as well as transport. It was the highest since the 6.9 percent recorded in October 2018. In Metro Manila, public transport drivers and motorcycle delivery riders are complaining about losing several days’ earnings to traffic fines of up to P3,000 imposed for even minor infractions due to confusing road signs and stoplight speed traps.

The Marcos administration has given top priority to agriculture and food security, but other sectors are also calling for relief. Underpinning all the responses is the need for good governance, the judicious use of limited resources and lasting institutional reforms.