Philippine Independence Day ( June 12,1898 ) 

Inflation hits just about anything you need to live - rice, clothing, food, fares, medicines, gas, tuitions, name it. In May, RP's inflation rose to a  nine-year high of 9.6% killing about 35 million poor Filipinos softly and silently while the country is leading to a perfect economic storm.

RP should start to see unrest and trouble by this silent killing inflation. In 2007 it was just 2.8% but now the tables have almost turned and experts are seing inflation could rise into double digits this June. The philippine economy faces a perfect economic storm of inflation at a-year high as food and oil prices soar, rising interest and slowing growth, spice up with rising  unemployment and slowing down production, leading the Banko Sentral ng Pilipinas (BSP) to hike brrowing costs for the first time since 2005.

Can we stop this inflation? From a $10 a barrel in 1999, oil prices climbed to $95 last year and to a record $136.78 for today, January 12. I hope we can all return to a normal cycle. Yet it might be too late to control inflation. Maybe the worst is yet to come. Food prices rose 14% in May as rice rocketed 31.7% and corn 27.1%. Food riot began to occur in Mindanao. Gasoline, Kerosene and diesel prices have also surged.

It have sparked protest around the globe, from the US to Europe, to India and Indonesia. When crude prices hit $135 a barrel, oil industry executives in the Philippines needed to recoup between P8 and P11 a liter which would push up the price of gasoline to P65 a liter and that of diesel to P58 a liter. As $1-a barrel jump in international crude prices translate to an increase of about 35 centavo a liter at the pump. Oil shooting up to $200 a barrel would push pump prices of gasoline to about P88 a liter and of diesel to about P71 a liter. My goodness, why  some oil companies local and abroad have no mercy about the impact on consumers especially those who are just self-serving opportunistic big capitalists, making profits more than double.

In Manila, the problem was not only oil but every other commodity for which there is cartel -fertilizer, wheat, corn, sugar and electricity. When oil hit the $130-a-barrel mark, GDP growth of 6.3%-7.0% is no longer attainable acording to the government. And if oil reaches $200 a barrel, the transport sector, drivers and operators would not spare them from incurring losses. Fare adjustments and subsidies would just be eaten up by the fuel price increases.

Further, because of the soaring costs of imported crude, the country's oil import bill will grow which will cause the trade deficit to widen and the peso to weaken against the US dollar. The peso gained 19% against the dollar last year, making it Asia's Best Performing Currency, but it lost 6.6% so far this year.

As per economic production, inflation rates force consumers to slowdown on their purchase of goods and service, thereby weakening the single biggest impetus for production in any economy, 70% of total demand in our case.

Rising prices lead workers to demand higher wages which firms are hard-pressed to resist, thereby raising production costs and forcing cutbacks in both their output and work force.

So what can and should be done? Subsidy will last but for a moment. This is the time of natural gas station. Fare hikes, subsidies, adjustments would only fall short and would not help solve the problem in the long run. The government must have an alternative and not at always at the mercy of the oil market which we cannot control .

Scrapping the 12% VAT on oil could give the PUJ  relief. Taxes on commodities should be removed also to help reduce their costs to consumers. And let all Filipino on this Independence Day must unite together, shun away from  selfish  motivations but embracing all efforts and  strategies to set this Republic free  from this perfect economic storm.