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By CONG B. CORRALES, Associate Editor . 

AS Northern Mindanao reeled under the high inflation rate during the third quarter, a government economic expert advised consumers to tighten their belt as the Train Law comes chugging along again in January next year.

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National Economic and Development Authority 10’s Knowledge Division chief Engr. Celso Clarete attributed the high inflation rate in the region to the “unfortunate” timing of the implementation of the first phase of the Duterte administration’s Tax Reform Acceleration and Inclusion Law.

“It was unfortunate that the Train Law was implemented at a time when the world market was so volatile when the prices of petroleum were erratic,” Clarete said during Neda 10’s media forum on the 2018 3rd Quarter Regional Economic Situationer on Friday.

Clarete strongly advised consumers to consider prioritizing what to spend next year, adding that they may have to buckle up by spending on needs more than spending on wants.

In a briefer, Neda 10 said Region 10 experienced a 3.3-percentage point increase in inflation in the third quarter this year compared to the same period last year.

Although this figure is far from the 15 percent inflation in 2008, Clarete said, the 6.1-percent inflation in the third quarter was still higher than the Bangko Sentral ng Pilipinas’ targeted inflation rate of 2.0 percent to 4.0 percent for the period of 2016 to 2018.

“Among the provinces in the region, Lanao del Norte posted the highest inflation at 8.3 percent, followed by Camiguin and Bukidnon by 6.6 percent and 6.5 percent, respectively,” the Neda 10 briefer reads in part.

Tax collections in the region also suffered as the Train Law barreled through in the third quarter this year.

“All revenue district offices reported decreases in revenue collections at P2.08 billion, lower by 32 percent than last year’s figure… The revenue district of Cagayan de Oro City experienced the biggest drop in the collection at 35 percent,” reads the Neda 10 briefer.

Clarete explained that inflation redistributes wealth where the poor and middle-income households bear most of the brunt. He said inflation brings about a loss of the people’s purchasing power and with it a domino effect to the rest of the economic sectors.

Fixed-income earners and unorganized labor forces are the losers during an inflation.

“As prices of commodities go up, fixed income earners will have a hard time catching up. The unorganized labor force also stands to lose during inflation since they don’t have much bargaining power against companies compared to unionized labor forces. They cannot demand wage increases as much,” said Clarete.

In the production sector, Clarete explained that inflation will encourage production in the short term. However, it will also inversely affect production in the long term. As the cost of production rises, he added, the quality of the commodity produced almost always suffer.

The other effects of inflation, Clarete bared, are the decline of savings as the value of money declines; decline in foreign capital which will drive production cost through the roof; currency deterioration that will bring about a negative balance of payments, which in turn, would drive interest rates in lending up.

In all of these effects, he said, none are as obvious as the social and political unrest during a high inflation period.

Clarete explained that as people find it harder and harder to cope up with their daily spending, social and political unrest almost always follow.

However, he offered a sliver of hope as he believes that the second phase of Train Law would be “tamer” than the first.

“We are already experiencing a high inflation. The next round would have a relatively soft impact,” Clarete said.

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Before joining the Gold Star Daily, Cong worked as the deputy director of the multimedia desk of the Philippine Center for Investigative Journalism (PCIJ), and before that he served as a writing fellow of Vera Files. Under the pen name "Cong," Leonardo Vicente B. Corrales has worked as a journalist since 2008.Corrales has published news, in-depth, investigative and feature articles on agrarian reform, peace and dialogue initiatives, climate justice, and socio-economics in local and international news organizations, which which includes among others: Philippine Daily Inquirer, Business World, MindaNews, Interaksyon.com, Agence France-Presse, Xinhua News Wires, Thomson-Reuters News Wires, UCANews.com, and Pecojon-PH.He is currently the Editor in Chief of this paper.