Economist urges public awareness on inflation

An economics professor is urging for more educational awareness on inflation and as to how it should be understood.

Dr. Teresa P. Fabiania, Dean of the College of Humanities, Social Sciences and Communication of the Holy Cross of Davao College told Edge Davao that many people misunderstood the concept of inflation, a current turmoil of the Philippine economy.

“The thing about it is that there has been a whole exaggeration with the issue of the inflation rate that is happening in our economy right now,” Fabiania said.

She added, “It doesn’t mean that when the inflation rate lowers down, it does not mean that the prices would also lower down. We are just comparing the increase of percentage.”

The professor’s remark came after Bangko Sentral ng Pilipinas’ announcement that the country’s inflation rate accelerated to 6.4% in August, the fastest in nearly 10 years.

She added, “They put so much focus on it, people neglected the fact that our debt ratio (debt-to GDP ratio) lowered since then.”

According to the Bureau of Treasury and Philippine Statistics Authority, the Philippines’ debt-to-GDP ratio from 2016 to 2017 was 42.1%, down from 44.7% in 2015. The 2016-2017 ratio is the lowest level since 1996.

The Debt-to-GDP ratio, which refers to government debt as a percentage of gross domestic product, is one of the closely watched indicators by international credit rating agencies as it demonstrates a country’s ability to pay off its debts. A lower debt-to-GDP ratio is generally perceived as favorable — an indicator of a robust economy — as it shows that a country is producing enough to be able to repay its debts.

On the other hand, Dr. Fabiania believes that President Rodrigo Duterte is doing his part in monitoring the economy of the country.

“Another problem is that, some critics of the government are politicizing the situation,” Fabiania said.

With regards to Sen. Panfilo Lacson’s remark on Duterte putting too much prioritization on the war against drugs, the professor believes that prioritizing the economy and peace and order must be put into balance.

In terms of educating the public, she is urging the government to conduct more talks for public awareness.

“Unless the public will be educated further using the Filipino language or in a simplier language, people will not understand how inflation works,” She added, “Because some people do not understand how the economy works.”

Last August, the Bangko Sentral ng Pilipinas (BSP) conductedvits first public information campaign (PIC) on inflation developments at the BSP Davao Regional Office.

The PIC tackled recent developments in inflation, including its aim in informing the public of the BSP’s assessment of current drivers of inflation, views on the future path of inflation, and the actions that have been taken to help ensure that inflation is brought back to target in 2019.

Meanwhile, President Duterte assured the public that the government is trying their best to control the situation.

He then blamed United States President Donald Trump’s trade war with China as a contributing factor to the inflation back home.

The president’s remark comes after the US imposed taxes products coming from China, while China has done the same to US goods. This would have some effect on the Philippines when it comes to importing US goods made of materials from China.

But economists are suggesting that the inflation is because of rising oil prices, the weakening of the peso against the US dollar, and expectations of people about inflation.

On Thursday, September 6, the Philippine peso had reached a 13-year low when its value against the dollar got to P53.8 to $1.