ROUNDUP: Inflation is everybody’s problem

What is this thing called inflation? The man on the street cares less for the word than for the price of galunggong on his table, but they are one and the same. Simply put, inflation measures price increases –- and whether you live in Forbes Park or on Gov. Forbes Ave. (pronounced For-bes), it’s a worry.

But how does it compare with other problems Filipinos are facing? What weighs heavier on your mind?

a) Inflation or oil prices
b) Inflation or corruption
c) Inflation or the poor quality of education
d) Inflation or lack of jobs
e) Inflation or national poverty
f) Inflation or your waist line

Roundup

At 11.4% in June, inflation is now at the highest point in 14 years. Bangko Sentral ng Pilipinas, the central bank of the Philippines, had to spend precious dollars to defend the peso early on Friday when the news on inflation caused the local currency to slide to a new 10-month low of P45.70 against the US dollar. It doesn’t help that oil hit another record high north of $145 this week.

Central bank governor Amando Tetangco Jr. tried to temper the public’s reaction to inflation. Next year, it will all be better, he says. Maybe it will, but with around half of the population on subsistence mode, the months between now and next year will matter a lot to the average Filipino family.

Shares have been tumbling the whole week in reaction to the inflation jitters, both locally and in other markets across the globe. Asian stocks are set for the worst first half record in 16 years. These days, nerves of steel are needed for those who are still invested in stocks. Companies, like SMC Packaging, are rethinking IPO plans; others are rethinking business strategies. Jollibee is planning to expand cheap fast-food brand Manong Pepe. Expect more public discussion and marketing strategies revolving around biting the bullet, surviving tough times and hunkering down.

As can be expected, overall business sentiment continues to be sour. First Metro Investment Corp. and the University of Asia & the Pacific expect the economy to grow 4.0 percent in the second quarter. A Reuters poll showed that economists expect a 5.1 percent GDP in the second half, much lower than 7.3 percent in the same period last year.

Financial instruments

Borrowing in foreign currencies is a growing trend, as the peso’s two-year upswing made it more attractive than borrowing in the peso. There was a 42% increase in FCDU (foreign currency deposit unit) lending in the first quarter, the central bank said. If the peso depreciation keeps up, paying off these loans will not be as easy as borrowers think it would be. Experts have repeatedly warned of the risks of cross-currency transactions and this is one of those.

Personal Finance

Whether we are talking about inflation, record-high oil prices or slowing economic growth, the personal finance strategies are the same: save more, spend less, be money-smart, and keep your job.

Oh, and don’t forget to relax and be patient. This is not yet the Great Depression.

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