Gasoline prices have skyrocketed and it looks like more bad news is coming. Finance Secretary Carlos Dominguez III is quoted as predicting the economic impact of the Russia-Ukraine War:
- Inflation. Oil and food prices are expected to go up as Russia is the largest exporter of natural gas and wheat while Ukraine is the fourth largest exporter of corn;
- Interest Rates. Interest rates will likely go up, but this would be more likely due to the Fed’s tightening of monetary policy;
- Investments. Investor risk aversion and global policy uncertainty can lead to capital outflows and can cause fiscal distress;
- Fiscal spending. The government will need to find the means to increase funding in social protection programs to support vulnerable citizens and critical sectors.
Jeepney and tricycle drivers and vehicle owners have already felt the jump in gasoline prices. Transport fare increases are sure to follow. The same for cooking gas as housewives will discover when they next have their tanks refilled. The price of rice, vegetables, poultry, meat will go up with higher freight cost. And don’t forget electricity, a good deal of it is produced by oil-fired plants.
As if that were not enough, the peso has been depreciating. Last Friday, March 11, the peso guiding rate was ₱52.269 (morning session) vs.