Runaway Inflation? Mainstream Media Articles Covering Inflation and Food Crisis Soar!

The most important thing to remember is that inflation is not an act of God, that inflation is not a catastrophe of the elements or a disease that comes like the plague. Inflation is a policy—Ludwig von Mises

The Government’s August CPI or inflation data is due out on September 5.

Whatever statistical number that the government shows would seem immaterial. 

Reason? Articles on inflation and a food crisis have flooded media over the past two days!

The government calculates statistical inflation by estimating the average price changes of a basket of goods and services consumed by households in a given period

However, averaging the prices of ball pens, bananas, clothes and air conditioners consumed or used hasn’t only impractical, it is unrealistic.

Aside from providing different utilities, the consumption scale of such goods and services differs from person to person. An individual’s choice is hardly static too.  For instance, a choice for lunch for today may be steak and adobo for tomorrow.

Nevertheless, the reduction and the simplification of the complexities of the world that opens the windows for political control signifies the allure of statistics. 

For instance, last week, the BSP asserted that inflation rates won't reach 6 to 7%. But that’s just a statistical mirage.

You see, the old CPI, which was discontinued last June, with the base year of 2006 has some 60 bps edge over the reconstructed CPI with the base year of 2012. Since the July CPI (2012 base) was at 5.7%, the equivalent for CPI 2006 base would be 6.3%. From this angle, the BSP has already missed its target!

We don’t need to know that the CPI has spiraled in August. These articles tell us so.

August 28:

1 Impose rice price ceiling, Duterte urged

2 Piñol No P70 per kilo rice in Zamboanga City

3 DTI Manufacturers vow to keep prices ‘stable’

4 Villar Filipinos can live without ‘galunggong’

5 NFA exec blames its council’s ‘bureaucracy’ in delay of rice importation

6 Piñol on Zamboanga rice crisis I’m not losing hope

7 Solon NFA rice diversion led to shortage

August 29:

1 Solons call for resignation of DA, NFA council heads over rice crisis

2 Tariff on rice to curb inflation by 0.4 percentage point

3 Villar urges DTI to recommend price ceiling on rice

4 Villar Legalizing rice smuggling will only encourage more smuggling

5 NFA, council swap charges on rice crisis

6 Villar Price of rice ‘worsened’ under Piñol

7 Groups buck rice price ceilings

8 Inflation that aids economic growth not a concern budget chief

9 Admin OKs measures to ease price surge

In two days, 17 articles. Incredible.

The magnified politicization of inflation translates to a runaway street inflation! 

Continued inflation inevitably leads to catastrophe. Ludwig von Mises