Inflation climbed to 6.4 percent in August, a nine-year high according to records. Filipinos who are already struggling to survive are hurting more from the rising costs. And unfortunately for almost everyone, wages aren’t keeping up with the skyrocketing prices. People are, therefore, starting to tighten their belts, limiting their spending and foregoing many “unnecessary” expenses.
It may be wise to consider how we should behave during inflationary times, such as what we are experiencing right now. Aside from being bad for ordinary consumers, inflation is also seen as damaging to pensioners, investors, and savers as it decreases the value of interests and dividends, not to mention the original capital.
Traditionally, there are assets that have shown to hold up better during times of inflation, like commodities, gold, commodity-producing equities (companies in energy and materials sectors), and short-duration bonds.
In the face of inflation, personal or household savings as well as national savings drop as there is less money to save. But even if it takes great effort to set aside some money after paying for basic expenses, everyone must still try to save.
Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. insists that “elevated oil prices” and the “unfortunate confluence of cost-push factors” are the reasons transport and power prices are higher. He said: “Much of it has to do with food supply shocks, rice in particular. These warrant more decisive nonmonetary measures to fully address.”
The government, therefore, must act fast to help the poor and install programs to soften the effects of escalating prices. Aside from this, monetary and trade policies certainly need to be looked into and, hopefully, revised.
Speedy action is important as companies, even big ones like Nestlé and not just the ordinary citizens, are already feeling the pain. The manufacturing giant has warned that it may have to shut down its coffee plant in Cagayan de Oro “due to TRAIN and supply woes.” This happens after a version of TRAIN 2 (Tax Reform for Attracting Better and High Quality Opportunities) was passed in Congress in its second reading last week.
We can’t ignore the fact that the peso has also been performing weakly, and that the nation is in the middle of a rice crisis. The media is, likewise, playing a big role, broadcasting the experiences of ordinary citizens having to travel long distances just to buy rice at cheaper prices. This may plant the seed of panic, and that is the last thing that we want.
The government obviously has a lot on its plate right now and, needless to say, it would be best to set aside politicking for the time being and focus on helping the people survive. Review the policies and make people accountable for the blunders. Maybe if we start from there the people may start trusting the administration again.