The head of the Catholic Council of the Laity of the Philippines warned of an impending rise in prices of basic commodities due to “hyperinflation” because of the amount of money in the hands of people following last week’s national elections.
“We will witness hyperinflation in the coming days,” said Jun Cruz, president of the Sangguniang Laiko ng Pilipinas (Council of the Laity of the Philippines), in an interview over Radio Veritas 846.
He said a lot money is in the market because of “massive vote-buying” during the elections.
“Billion of pesos entered the economy without contributing products or services,” he said. “Because of this, the value of money will go down. And now the prices of basic commodities will be going up.”
The Department of Trade and Industry last week approved raising the suggested retail price (SRP) of 82 basic necessities and prime commodities.
The department noted that the costs of major raw materials and of fuel have also increased.
Among the products which now have a higher SRP are drinking water in bottles and containers, canned fish, processed and canned pork, processed and canned beef, processed milk, vinegar, soy sauce, and fish sauce or “patis.”
Also included are locally manufactured instant noodles, coffee, salt, laundry soap, detergent, candles, flour, toilet soap, and batteries.
Economists, however, said the country is not yet heading toward “hyperinflation,” or the rapid, excessive, and out-of-control general price increases.
“Added demand from vote-buying can have a push in the inflation, but it’s not enough to cause hyperinflation,” said Carlo Asuncion, chief economist of Unionbank.
“I do not think that there is a threat of hyperinflation,” he said, adding that speaking about it will only create “unnecessary panic that we all do not need at the moment or not ever.”
Asuncion noted that historically, election spending adds one percent to the country’s economic growth, but he said it is “But hard to determine how much is from vote-buying.”
The Philippine Statistics Authority has earlier reported an annual inflation rate of 4.9 percent for April, breaching the government target of 2-4 percent this year.
The higher rate was supposed to have been driven by the increasing costs of global commodities due to the conflict between Ukraine and Russia.
Asuncion said there will be an expected easing in the economy toward next year once the Philippine Central Bank increases its interest to 2.5% from 2% by June until the end of the year.
The central bank has held a stable 2% interest since November 2020 to help the economy bounce back from the impact of the pandemic.
Ser Percival Peña-Reyes, associate director at the Ateneo Center for Economic Research and Development, said the choice of economic managers in the next administration in the country will be “crucial” because “it will have an impact on confidence among businesses and consumers.”
“The new economic managers should be able to push or pull the right levers, both fiscal and monetary policies, to balance competing interests in the economy during these challenging times,” he said.