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By Darwin G. Amojelar Reporter
Galloping inflation rates in the
Philippines and other Southeast Asian countries could lead to social
unrest, the World Bank warned on Tuesday.
In the Philippines, the inflation
rate surged to 9.6 percent in May, the fastest pace in nine years,
on skyrocketing food and fuel prices. For the first five months of
the year, it rose 6.9 percent, higher compared to targets of the
Development Budget and Coordinating Committee of between 3 percent
and 5 percent in 2008.
The Bangko Sentral ng Pilipinas
had projected that inflation is likely to reach 10 percent to 11
percent year on year this month as global oil and commodity prices
remain high. Dubai crude, the Philippine benchmark for oil, was
averaging about $120.50 per barrel in June, up by roughly a third
year on year. The price of imported diesel at the Mean of Platts
Singapore topped $161.23 per barrel and gasoline, $130.92 per
barrel.
“Surging rice and commodity
prices in the region are posing a risk of social unrest and higher
production costs,” the World Bank said in a study, Global
Development Finance 2008.
The Washington-based lender said
the surge in commodity prices over the past six to nine
months—especially of food—has pushed inflation higher and
sparked concerns about its adverse effects on the poor.
The National Statistics Office
reported that the annual inflation for food in May rose 14.3 percent
from 12 percent in April.
The price of rice was higher at
31.7 percent in May from 24.6 percent in April; corn, 27.1 percent
from 19.3 percent; cereal preparations, 15.3 percent from 13.9
percent; dairy products, 13.7 percent from 13.2 percent; fish, 9.6
percent from 8.8 percent; fruits and vegetables, 10.1 percent from
7.8 percent; meat, 10.4 percent from 9.8 percent; and miscellaneous
foods, 7.6 percent from 6.3 percent.
The World Bank said the effects
of higher food prices, combined with those of additional increases
in oil and metals prices, would cost the region an aggregate income
loss of about 1 percent of gross domestic product (GDP) in 2008. GDP
is the total value of goods and services produced in a country in a
year.
The bank said net oil importers
such as Laos, the Philippines and Thailand are estimated to have
experienced terms-of-trade losses of 1.5 percent to 2 percent of GDP
in 2004 to 2007.
Winners and losers
Net energy and non-energy primary
commodity exporters such as Indonesia, Malaysia and Vietnam are
estimated to have received windfall terms-of trade gains of 1
percent to 2 percent of GDP per year during 2004 to 2007.
The multilateral lender said
governments face the daunting challenge of protecting the most
vulnerable of their citizens in a fiscally responsible and
sustainable manner.
“As much as possible,
governments should use or expand social safety nets to provide
targeted income support instead of subsidizing prices generally,
which can be extremely expensive,” the World Bank added.
A recent study done by the
Philippines’ National Economic and Development Authority (NEDA)
showed that surging oil prices could reverse gains in eradicating
poverty in the Philippines. If oil reaches $200 per barrel—as some
are predicting—even the most affluent Filipino families are
vulnerable.
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