2018 inflation highest in 10 years amid slowing growth — IBON

January 4, 2019

by IBON Foundation

Inflation for 2018 is more than double the Duterte administration’s original inflation target for the year and the highest in a decade, research group IBON said. Along with slowing economic growth, this further points to the failure of government’s economic managers to rein in consumer prices and of its neoliberal policies, such as the Tax Reform for Acceleration and Inclusion (TRAIN), which continue to burden the poorest Filipino families, said the group.

The reported annual average inflation rate rose to 5.2% in 2018 from 2.9% in 2017 and 1.6% in 2016. IBON noted that this is much higher than the government’s original annual inflation projection of 2-4% for 2018 and the highest since the 8.2% rate in 2008.

Aside from missing its inflation target, the government is also facing an economic slowdown. The economic growth target for 2018 has already been adjusted downwards from 7-8% to 6.5-6.9 percent. The gross domestic product growth rate already slowed to 6.3% in the first three quarters of 2018 from 6.7% in 2017 and 6.9% in 2016.

Inflation eased last December to 5.1% but the poorest half of the population still saw their real income erode by anywhere from Php3,300 to Php7,300 from the high inflation throughout 2018. Rising prices always spell more difficulty for the poor especially amid low or even stagnant incomes, IBON said.

The Duterte administration should also not be too quick to take credit for the lower year-end inflation, IBON added. The biggest factor easing inflation is not anything the government has done but rather falling global oil prices from increased supply amid a global economic downturn. On the contrary, the Duterte administration’s insistence on TRAIN’s second tranche of fuel excise taxes adds inflationary pressure, the group said.

The economic managers will fallaciously claim that relatively slower inflation in the first few months of 2019 proves that TRAIN and the additional fuel excise taxes are not inflationary, IBON said. Such dismissiveness of how TRAIN makes consumer goods and services more expensive however only affirms the government’s insensitivity to the plight of the Filipino people, especially the poor.

IBON said that poor Filipino families worst affected by last year’s high prices will continue to carry the burden of these into the new year if government does not take genuine measures to curb inflation and arrest a faltering economy. The government can start with repealing TRAIN and implementing a progressive tax system. ###