Inflation has been rising. Government says it is now beyond 4% and many institutions are saying that we can expect inflation to breach the 5% mark very soon. The government already conceded that it will miss its inflation target — what they are not saying is they are missing the target by a mile.  The other day, I passed by the gas station to get some unleaded fuel and told the gasoline attendant to pump me P 1,000 worth of fuel. For a cheapskate like me, that’s a lot of money to part but we all need to spend, whether we like it or not.  As I was watching the pump, I was surprised to see that my precious 1,000 bucks was only able to buy a little over 17 liters of fuel! The nostalgic in me reminisced about the bygone years where pumping 500 pesos was enough to fill my gas tank – oh the glory days! It’s not just fuel that reduced my purchasing power, the same applies whenever we buy groceries, pay for bills, eat at restaurants and the like.

From my perspective, I don’t think inflation is just at 4 to 5% — and my wallet agrees with me.

Just what is inflation? Investopedia defines inflation as “the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum.” In practical terms, it means that prices will rise according to the inflation rate over one year (per annum); if inflation is at 4%, a P100 per kilogram of Chicken today will cost P104 per kilogram next year.  Consumer Price Index or CPI is the barometer to which inflation is measured. In general, the consumer price index reflects changes in the cost to the average consumer of acquiring a basket of goods and services that may be fixed or changed at specified intervals, such as yearly. The basket includes the most basic goods the average Filipino family consumes – general food items, utilities, oil, etc.

Alright, enough economic gibberish – no one wants to be reminded of the boring economics classes we had to take during our student days. Unfortunately, the ‘boring economics’ we all hate is pretty much the reason why we are all dumbfounded – trying to figure why the value of money in our wallets are shrinking.

Our knee jerk reaction to rising prices is always to be overwhelmed, and for a good reason. I’m not sure if this applies to other folks but here’s how I react whenever inflation is very high: disbelief, anger, frustration, blame, acceptance, indifference. I get shocked that prices goes up so fast so soon (like fuel); then I am annoyed as to why prices are going up such as external factors (middle east situation, financial crisis, etc.); I move on to being frustrated – frustrated at the government for not making the right responses, frustrated at myself for my microscopic income; then I blame the government for being inept and sometimes blame myself for missed business opportunities that would have cushioned the rising prices; I slowly begin accepting the harsh economic realities that life is as such and there’s really nothing I can do about it; finally, I move to being indifferent – after all, my ramblings will not bring prices down and I resign to the fact that there’s nothing I can do.

… to be continued.

Philippines to incur Php 300 Billion in deficit for 2009

· According to the Department of Finance, the Philippines will likely report a budget deficit for 2009 of below PHP300 billion ($6.56 billion).

· One of the reasons for the deficit is that the Bureau of Customs likely collected PHP50 billion less than it targeted last year.

· A smaller shortfall than the PHP57 billion initially estimated.

· The budget deficit data are scheduled to be released later this month.

Inflation jumps to 8-month high in Dec

· For December, The country’s inflation rate went to an 8-month high of 4.4%.

· This is due to higher food and oil prices.

· Bringing the average inflation for 2009 to 3.2%; still with in the Central Bank’s estimate of 2.5% to 4.5%.

· The increase in inflation rate is said to unlikely push the central bank to hike rates soon.

· The Bangko Sentral has set an average inflation target of 3.5% and 5.5% for 2010 and 3% to 5% for 2011.

· The Philippines’ annual inflation rate could fall below zero in August before slightly picking up in the coming months.

· The central bank forecast the annual change in August consumer prices to range between a 0.3% fall and a rise of 0.6%, after a 0.2% climb in July, the slowest in more than two decades.

· Tetangco said the low inflation forecast continues to be driven by base effects mainly from oil and oil-affected products whose prices have dropped significantly year on year.

· “Inflation is expected to take on a slightly increasing pace but still stay in the single-digit path over the forecast horizon.”—he added

· The government will release the official inflation data for August on September 4.