Press Release
September 6, 2008

Prioritize things, Loren tells gov't in face of surging inflation

Senator Loren Legarda yesterday called on the government to prioritize things and review its economic policy in the face of surging inflation which stood at 12.5 percent in July

"While the pace is moderate as they say, the thing is it still persists and it can not be taken for granted because people, specially the poor, are too vulnerable to inflation no matter how slight it is," said Legarda, who is the chairman of the Senate Committee on Economic Affairs.

The National Statistics Office data showed that August inflation was up from the revised 12.3 percent hike in July, which is still within the forecast of Bangko Sentral ng Pilipinas, which had earlier projected the range to be within 11.8 to 12.6 percent.

"Still, we cannot close our eyes to the realties that because of so many factors like the volatile crude and oil prices in the world market, our country remains vulnerable owing to the fact that we are not ready for this kind of eventuality," Legarda said.

"We are always caught unprepared. Why? Because we do not have sound long-term economic goal which would make this country strong enough to cushion the impact of unforeseen circumstances like this," she added.

"Unfortunately, the government seemed busy in other "fronts" while the people are experiencing dehumanizing poverty," she said.

The rise in prices of goods and services in August was the highest in average not seen in 17 years, and this, Legarda said, should be enough reason for our economic managers to be alert.

According to the NSO, all commodity groups recorded higher inflation except for those under the food, beverage and tobacco basket. Food inflation slowed to 18.1 percent in August from 18.6 percent in the previous month. Inflation of rice, the country's staple grain, decelerated to 45.1 percent last month from 50.0 percent in July.

On the other hand, the cost of fuel, light and water jumped 7.2 percent in August from 5.5 percent a month before. Inflation for housing and repair also went up at 5.0 percent last month from 4.6 percent in July.

Services inflation stood at 13.5 percent last month from 12.5 percent in July. The cost of clothing climbed faster at 4.6 percent in August compared to 4.5 percent in July; while the cost of miscellaneous items measured for inflation went up 3.3 percent last month from 3.0 percent in the previous month.

"All these undoubtedly, could be attributed to the oil crisis, which had hit historic highs earlier this year. Although there is some relief owing to the slight downtrend of oil prices, we should not as yet relax. Instead, the government must take the opportunity to come up with long-term solution," she said.

International crude prices have fallen below the crucial $110/barrel mark to hit $107 a barrel as of Thursday.

"The trouble with this government is that it has the tendency to be complacent. It's time it paid attention to realistic solution and that is giving more weight to the agricultural sector, technological advance, and education," She said.

"Isn't it ironic that we are affected by rise in commodities such as food when are in an agricultural country? Or we are our own worst enemies?" Legarda lamented.

Analysts also pointed out as inflationary the recent announcement by Manila Electric Company that it will raise its rates.

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