Cebu business leaders are pinning their hopes on government agencies to really temper down the increase in prices of commodities, as economists believe that inflation is already peaking.
However, they acknowledge that other factors may come into play and prove things difficult especially the continued increase in prices of oil products, as another set of price hikes will be implemented starting today.
Non monetary measures
Steven Yu, Mandaue Chamber of Commerce and Industry (MCCI) vice president for external affairs, said government agencies could implement more non-monetary measures to ease up inflation, like ensuring more supply of rice.
“We certainly hope that this will be the peak, and it will go downtrend from here. During the Arroyo administration, inflation did go from 7 percent to 1.5 percent in five months’ time,” Yu said.
“The government has to focus on implementing the rapid increase of supply to the market of essential commodities other than oil, to address the supply-side issues which cause the increase in prices,” he added.
Last week, the government reported that inflation rose to 6.7 percent in September — the highest in more than nine years. It is the fastest since the headline inflation rate of 7.2 percent in February 2009.
But the rate is lower than most analysts’ expectations, with some expecting the consumer price index to breach 7 percent this month.
Inflation peaked?
In an earlier statement, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said the inflation rate could have already peaked and it could be the start of a decline in the pace of price hikes all the way to 2020.
This, barring unforeseen events like the continued surge in international oil prices.
For Yu, government should increase the supply of rice in the country while the National Food Authority (NFA) should make cheaper rice available in key and major supermarkets in each area. There should also be proper planning in the importation of rice ahead of time.
“Government should also lessen the requirements and make it easy to import other essential commodities like sugar, chicken parts, pork, etc. Start with allowing manufacturers to import essential commodities to supply their needs,” he added.
No more rate hikes
For his part, Antonio Chiu, Cebu Chamber of Commerce and Industry (CCCI) president, said he was confident that the BSP, the Department of Trade and Industry (DTI) and the Department of Finance (DOF) could control and bring down inflation but he also cited many other factors that could come into play.
Since the continued inflation increases had not been purely a monetary issue, Chiu said, that the BSP should refrain from making additional rate hikes for the rest of the year.
“Further rate hikes might have the effect of strengthening the peso but it might also trigger business to slow down,” he said.
Easier said than done
Gordon Alan Joseph, Cebu Business Club president, said that bringing inflation to a downtrend is easier said than done.
Gordon said that there are little downward flexibility on prices unless there are drastic reductions in fuel prices.
Another fuel price hike
Robert Go, Philippine Retailers Association (PRA) Cebu Chapter president, said that oil and fuel prices had continued to increase, with another round being implemented starting today for the ninth straight week.
“There is a reactionary inflationary increase every oil increase. There is still no end to increases of oil since there are still more oil increases coming after 30 days of international increase. These are expected to come,” Go said.
He further explained that the weekly oil price hikes had been spiraling the costs on logistics among businesses and had been affecting all manufacturing distribution, from farm to market.
With this, he said other services would follow the increase from electricity, shipping, and airlines among others.
Fuel price hikes today
Based on the advisories from different oil companies, fuel products are expected to increase again starting 6 a.m. today.
The average increase for gasoline is between P0.80 to P1 per liter; while for diesel, the increase is between P1.40 to P1.50 per liter.
On the other hand, kerosene is expected to increase by P1.30 to P1.40 per liter.
World oil prices have been increasing due to US sanctions against Iran which could reduce oil supply. The Organization of Petroleum Exporting Countries have also not increased their outputs.