Media Drinks Government’s Kool Aid on Inflation

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RODRIGO DUTERTE did not run on an economic platform. He did not talk much about what economic changes people should expect. As president, he has admitted not knowing much about economics. Soon after his election, he showed his irritation when asked questions about business and financial issues.

Two years into his administration, he declared on June 22 that the economy was in the “doldrums” — contrary to the claims of some of his financial team. Meanwhile, the peso has been described as the worst performing currency; the Philippine Stock Exchange Composite Index (PSEi) has been mostly bearish, and more people have begun to feel the sting of rising inflation.

The government’s economic managers assured the public that the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law would not have drastic impact on the prices of commodities; that it would instead contribute to increased household spending due to the higher take-home pay.

But June’s inflation rate hit 5.2% from 4.6% in May, going way beyond the government’s forecast. Still, the administration’s economic managers have continued to deny that the rise in consumer goods has been an effect of TRAIN, citing instead other factors, such as the increase in global prices, as a cause.

A July 5 article by CNN Philippines reported the statement of  National Economic and Development Authority (NEDA) Secretary Ernesto Pernia, attributing the spike “to faster price increases in major commodities like food, fuel and transport, as well as host of factors, such as world oil prices, peso depreciation, and price of rice” (“Commodity prices breach five-year high in June”).

In a forum on democracy and governance held on July 5, University of the Philippines School of Economics professor Emmanuel de Dios reviewed the state of the economy, saying that while the economy is growing, the government continues to miss its growth expectations, underspend and fall below its total deficit and infrastructure spending targets; and let inflation break through government’s forecasts.  But no one has yet admitted to failures of economic management.

Media seems to have been satisfied to follow government’s lead, echoing its data and explanations; without providing further context, reflecting the same leniency in its analysis of what is wrong about the economy.

CMFR reviewed primetime newscasts (ABS-CBN 2’s TV Patrol, GMA-7’s 24 Oras and TV5’s Aksyon), broadsheets (BusinessWorld, BusinessMirror, Philippine Daily Inquirer, The Philippine Star and Manila Bulletin) and select websites (,, and Rappler) from July 1 to 7.

Drinking Government’s Kool-Aid

Most reporters have eagerly recorded the data presented by NEDA, the Department of Finance (DOF), and Banko Sentral ng Pilipinas (BSP), without citing alternative views from other experts. These have also gone along with explanatory notes provided by members of the economic team, ignoring the vagueness of the reasoning, or the lack of evidence presented.

Media reported inflation hitting a “5-year-high” at 5.2%, citing government data. Reports during the monitored period did not point out that the government’s base year for computing inflation was changed by the Philippine Statistics Authority (PSA) from 2006 to 2012.

In a column published in Rappler, University of the Philippines School of Economics Teaching Fellow JC Punongbayan explained that the PSA has been using 2006 as the base year to compute inflation for many years and the annual changes in prices are calculated using this benchmark. Using 2012 as the base year, government presented the lower figure of 5.2%. But if government had used the 2006 base year, the inflation rate would be 5.7% and not (“[OPINION] Why inflation is actually at a 9-year high”).

Regardless of what base year is used to compute the inflation rate, Punongbayan said the increase of prices of raw materials and the additional taxes placed upon basic commodities under the TRAIN law would have still driven up the cost of the finished products and market prices in general as such increased costs cause price hikes in advance. More important to note, an increase of the inflation rate of over 2 percent also affects the purchasing power of the poor.

Media has not reported the failure of government to act on the increase of the price of basic commodities even when the inflation rate went beyond the government’s target range. The government said that the Pantawid Pamilyang Pilipino Program (4Ps), the main poverty reduction and social development strategy, would provide cash grants to help mitigate the impact of inflation for poor households. But there have been no reports on the amounts provided are sufficient to keep up with the inflation.

Few media reports attempted to look beyond official statements and search out a broader perspective. The reports did not inquire much into the measures that could help people cope with economic difficulties.

So far, apart from the president’s word about the economy in the doldrums, government economists seem hesitant to admit some of the troubles that may have been caused by the new tax policy or even other problems that have not been sufficiently addressed.

Even those who support the tax reforms mandated by TRAIN lament its poor implementation which did not consider the need to protect wage workers and even the middle class, not to speak of the really poor.

Persistent questioning, verifying and reporting by the media is needed to change the government’s state of in denial.