How Cebu businesses can cope with rising inflation
The vibrant business process outsourcing (BPO) sector is
expected to help cushion the impact of inflation in Cebu./CDN FILE PHOTO
Business leaders remain optimistic that local economic contributors in Cebu will cushion the impact of the country’s rising inflation and the weakening peso.
But they are also encouraging businesses to implement measures to further protect themselves from the effects of inflation such as the
increase in cost of raw materials.
“In business, some controls that we do to mitigate these increasing in cost of raw materials caused by either exchange rate or demand supply — we move towards productivity. Productivity improvement through trainings for our people and through technology,” said Mandaue Chamber of Commerce and Industry (MCCI) President Stanley Go in a phone interview on Tuesday.
Go cited several factors that could contribute to higher inflation rates.
One of these is the increased income from increased economic activities.
He said that these conditions could bring more money in the system that could cause higher consumption and higher demand, which could possibly make it more difficult for the supply to catch up.
In Cebu, he noted several ongoing constructions of buildings for offices, malls or hotels as signs of increased economic activities.
Local businesses are optimistic and aggressive in their expansion plans, together with government efforts on public infrastructure spending.
Other factors he cited are the prices of global crude oil and the weakening peso currency value.
Government reported that inflation rate rose to 5.2 percent year-on-year in June — the fastest rate of increase in prices of basic goods and services in over five years.
For the first half of 2018 alone, headline inflation has already averaged 4.3 percent, well above the government’s full-year target range of between 2 to 4 percent.
BPOs, OFWs
For MCCI Vice President for External Affairs Steven Yu, the depreciation of the peso versus the US dollar has put a “dent” in the country’s growth momentum as this has led to an increase in interest rates.
However, for Cebu, he said that the growth in the business process outsourcing (BPO) sector, overseas Filipino workers’ remittances, construction and tourism receipts would temper the overall effect of inflation.
“Local businesses are advised to think out of the box by embracing digital transformation to drive up efficiency, bring down costs and reach out to new markets thereby increasing sales,” Yu said.
He pointed out that the increasing trend for adoption of a digital lifestyle where online sales transactions had been growing.
If local businesses could tap these markets, Yu said it would help them move up the ladder and stay ahead despite the changing tides of business.
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