Managing inflation

Earlier this month, the Philippine Statistics Authority (PSA) announced that inflation in December soared to 8.1 percent, the highest data since November 2008. The pickup was mainly brought about by the acceleration of costs in food, restaurants and accommodation services and housing.

This means that consumers will be paying more for the same goods and services previously afforded at a lower cost. Often, the rise in income does not keep pace with inflation, consequently becoming a budget problem as it minimizes our power to purchase.

The Bangko Sentral ng Pilipinas (BSP), however, said that last month’s inflation rate could have already reached its peak, consistent with the BSP’s target, “before decelerating in the succeeding months due to easing global oil and non-oil prices, negative base effects, and as the impact of BSP’s cumulative policy rate adjustments work its way to the economy.”

The central bank said that risks remain on the upside this year due to elevated global food prices caused by higher fertilizer prices and supply chain constraints, as well as trade restrictions in the domestic front. Although this is the case, the BSP believes that these “are seen to be broadly balanced in 2024.”

The government, through the BSP, is already on top of the inflation situation. In the coming weeks, economists are expecting the BSP to deliver more rate hikes to bring the benchmark rate to at least 6 percent and help temper inflation. Reportedly, the Marcos administration has extended the temporary tariff cuts on commodities including pork, rice, corn and coal, which would effectively augment supply and help lower costs.

As consumers, we too should empower ourselves with ways and means to survive the surge in inflation.

This includes basic habits such as budgeting wisely, pulling back from unnecessary expenditures, and if capable, investing in high-yielding assets such as bonds, stocks and real estate which offer far better yields than banks.

Looking for other streams of income could also help increase our purchasing capability.

If in case it is inevitable to spend on goods, be mindful of the budget, and stick to it.

The bottom line is, inflation makes basic costs on housing, energy, food and transportation, among others, more expensive for everyone. If the daily budget is limited, it is crucial to create a strategy, cut costs on the things that we can live without.

On the part of the public and private sector, there is a huge opportunity to join forces and ramp up education and financial literacy to help Filipinos manage their own finances. Understanding the basics will lead to a better and more strategic decision-making when it comes to finances. In fact, early childhood education can provide individuals with a strong foundation on money management.

During the pandemic, those who were financially knowledgeable and prepared for any eventualities were able to survive and thrive. The same can be said in this situation. Through an effective financial literacy program, Filipinos will be able to make sound financial decisions, avoid incurring debt, and most importantly, achieve financial goals. 

Editor’s note: The opinions expressed in the foregoing article are solely the author’s and do not reflect the opinions and beliefs of the Philippine News Agency (PNA) or any other office under the Presidential Communications Office.