By Beting Laygo Dolor i Contributing Editor
The Philippines’ inflation rate, which climbed steadily to worrisome levels in the second semester of last year, has tapered off to “safer” levels this year but economists warn that uncontrolled spending by the candidates for the May elections may trigger another round of upward movements.
Candidates for all elective positions generally overspend and there is little that the Commission on Elections (Comelec) can do to regulate the money flow.
Because the inflation rate from mid- to end-2018 rose without let-up, the government of President Rodrigo Duterte was forced to admit that its targets would not be met. His administration could only promise that the situation would improve “next year.”
So far, the government has been able to keep that promise.
By January of this year, the country’s inflation rate had slowed to 4.4 percent after experiencing a steady 10-month hike in 2018.
Economists predicted that the January rate would continue to February, although the government has yet to release the final figures for the second month of the year.
Last year’s steady rise in the prices of goods and services was mostly blamed on the Tax Reform for Acceleration and Inclusion Act (TRAIN) Law, which raised taxes on a wide range of consumer products. Effects of that law caused government planners to admit that the targeted average inflation rate of between two to four percent for the year would not be met.
Most Filipinos have come to accept the TRAIN Law, and they are aware that a TRAIN II is forthcoming.
The average for 2018 was finally pegged at 5.2 percent by the Philippine Statistics Authority, the highest rate in Southeast Asia.
The rate would have been worse had the Bangko Sentral ng Pilipinas (BSP) not taken the remedial step of raising interest rates five times in the year just past.
BSP Gov. Nestor Espenilla – who passed away unexpectedly last week – was credited for taking the right steps at the right times, thereby calming market fears.
Under his stewardship, the Philippine peso likewise stabilized after breaching the PHP 54:US$1 level in the third quarter of 2018.
As of this week, the peso had stabilized to PHP 52:US$1.
It should be noted that consumer prices had hit a 10-year high of 6.7 percent last year.
Just how much the May 13 elections will affect the country’s inflation rate is not yet clear. Although spending is substantially higher during presidential elections in the Philippines, the coming mid-term elections will still see the bulk of the candidates for the 18,000 positions at stake spend more than is allowed by law.
While Philippine election laws are relatively strict, candidates have long complained that the allowable budget per voter is not realistic. Because of this, they spend loosely in order to win.
The Comelec is unable to confirm what amount each candidate has spent, and what amount were “donations” from “friends.”
The BSP’s forecast that this year’s inflation to be somewhere between two to four percent was met with universal acceptance by the heads of the country’s top universal and commercial banks.