Just because we have not had a problem with inflation for more than 6 years now doesn’t mean that we should treat is as nothing but superstition like the White Walkers in the Game of Thrones.
OPEC’s intent to cut back oil production for the first time in 8 years (See Bloomberg story on OPEC) taken together with the depreciation of the Philippine Peso to a seven-year low and the Duterte Budget Secretary Ben Diokno’s promise of record deficit spending to more than 3% of GDP – the highest in seven years – should be a cause for concern for the inflation hawks. (Btw, the Bureau of Internal Revenue Commissioner Dulay has curiously not released the BIR’s collection performance for any period since the new administration began – not even for the Mr. Duterte’s First 100 Days report.) The 3 events taken together may just lead to the perfect inflationary storm. As it is, the inflation rate has risen from 1.9% in June 2016 to 2.4% in November. Even more worrisome, food inflation has reached 3.3% – which hurts the poorest Filipino families the most.
Are the local businesses out there worried about this awakening demon? Are there concerns for the marginalized sectors of society who bear the brunt of the inflationary pain? Or am I alone in worrying about the Pandora’s Box of cost-push inflation?
Inflation is coming!