Press Secretary Trixie Cruz-Angeles placed the cause of increasing inflation in the country squarely on the peso-dollar exchange rate that has dropped to an all-time low, and “not due to any local factors.”
This is misleading.
In a Sept. 27 media briefing, Cruz-Angeles was asked how President Ferdinand Marcos and his economic managers plan to manage the steadily weakening value of local currency.
“[T]he president is in constant touch with the economic team and they are closely monitoring this. As you know naman, the inflation rate isn’t due to any local factors; it’s really about the exchange rate.”
Source: RTVMalacañang, Press Briefing of Press Secretary Trixie Cruz-Angeles 9/27/2022, Sept. 27, 2022, watch from 6:32 to 6:53
Sonny Africa, executive director of IBON Foundation, told VERA Files Fact Check in an email that while rising global prices of food and the depreciation of the peso, driven by interest rate hikes in the United States, are indeed immediate inflation factors, the government has “direct control over factors like the excise and value added taxes it puts on goods and services consumed or, like fuel, used to produce other goods and services.”
“Pinning the blame wholly on global conditions may just be to divert attention from the government’s culpability and to justify its inaction,” Africa pointed out.
The government imposes excise taxes on local products such as alcohol, tobacco, petroleum, and sweetened beverages under the Tax Reform for Acceleration and Inclusion Law, raising their prices. (Read SONA 2020 Promise Tracker: Economy)
Filomeno Sta. Ana III, coordinator of the Action for Economic Reforms, echoed Africa’s view, saying that while external factors such as the rise in oil prices and the pandemic-related supply shocks do drive high prices, “domestic factors are also at work, mainly because of wrong or misguided policies.”
As an example, Sta. Ana noted that during the pandemic, transport costs went up because of the “government’s inability to provide adequate and affordable public transportation.”
Data from the Philippine Statistics Authority (PSA) show that the country’s headline inflation rate was at 6.3% in August 2022. Headline inflation “measures changes in the cost of living based on movements in the prices of a specified basket of major commodities.”
The International Monetary Fund describes an inflationary environment as a situation where “unevenly rising prices inevitably reduce the purchasing power of some consumers.”
According to the Bankers Association of the Philippines, the Philippine peso closed at P59 to the U.S. dollar on Oct. 4.
The average peso-dollar value for September was P57.43. From year to date, the peso depreciated by P8 from its Dec. 31, 2021 close of P51.
Dennis Mapa, PSA national statistician and civil registrar general, reported on Sept. 6 that the biggest contributors to inflation are food and non-alcoholic beverages; housing, water, electricity, gas and other fuels; and transport.
When asked in a forum about the effect of high dollar rates on inflation, Mapa explained that since imported fuel is bought using U.S. dollars, “there is an impact on the pump price” in the domestic market.
“Nakita natin ‘pag tumataas ‘yung fuel [prices], medyo may spike talaga two months after… medyo nakikita na namin na tumataas na rin ‘yung ibang items na affected by transport in particular,” he said, adding that the technical team will have to study the relationship of these factors.
(We are seeing that when fuel prices rise, we see a spike two months after on other items affected by transport in particular.)
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RTVMalacañang, Press Briefing of Press Secretary Trixie Cruz-Angeles 9/27/2022, Sept. 27, 2022
Philippine Statistics Authority, Press Conference on the August 2022 Inflation Report, Sept. 6, 2022
Philippine Statistics Authority, Headline Inflation (Conceptual Definition), accessed Oct. 3, 2022
International Monetary Fund, Inflation: Prices on the Rise, accessed Oct. 3, 2022
Philippine Statistics Authority, Summary Inflation Report Consumer Price Index (2018=100): August 2022, Sept. 6, 2022
Bangko Sentral ng Pilipinas, Bangko Sentral ng Pilipinas Price Stability, accessed Oct. 3, 2022
Bangko Sentral ng Pilipinas, KEEPING THE INFLATION TARGET UNCHANGED FOR 2022-2024, January 2022
Bangko Sentral ng Pilipinas, Daily Peso per US Dollar, accessed Oct. 3, 2022
Bureau of Internal Revenue, Excise Tax, accessed Oct. 3, 2022
Action for Economic Reforms, Personal communication (email), Sept. 28, 2022
IBON Foundation, Personal communication (email), Sept. 28, 2022
Bangko Sentral ng Pilipinas, Bangko Sentral ng Pilipinas Statistics – Exchange Rate, Oct. 4, 2022
Bankers Association of the Philippines, Bankers Association of the Philippines, accessed Oct. 4, 2022
(Guided by the code of principles of the International Fact-Checking Network at Poynter, VERA Files tracks the false claims, flip-flops, misleading statements of public officials and figures, and debunks them with factual evidence. Find out more about this initiative and our methodology.)