TRAIN’s impact

This has reference to the news article of Shiela Crisostomo in the Philippine STAR (Labor groups hit budget chief Diokno, June 2, 2018, Page 2) which quoted Labor Undersecretary Ciriaco Lagunzad III on the impact of TRAIN law on prices of products and services, along with the statements of Finance Secretary Carlos Dominguez and Agriculture Secretary Emmanuel Piñol.

Undersecretary Lagunzad’s statement is anchored on the analysis of the Department of Finance which states that TRAIN contributed only 0.4 percentage point to the inflation in excess of the average target inflation.

To illustrate, the May inflation is 4.6 percent, while average inflation is 3 percent, computed from the inflation target of 2 to 4 percent.

The excess of actual inflation rate over the average target is 1.6 percentage points.

Of this 1.6 percentage points, the 0.4 percentage point 0.4 percentage attributed to TRAIN and this is equivalent to a share of 25 percent, computed as 0.4 ppt/1.6ppt.

It may appear in the news as presented that the statement of Undersecretary Lagunzad on the effect of TRAIN on prices of products and services is not in accord with the statement of the DOF. However, a thorough and careful analysis of the data will show that the estimated 25 percent impact is the result of dividing the effect of TRAIN at 0.4 ppt by 1.5 ppts, April inflation in excess of the average inflation target. The April inflation was 4.5 percent. – Raul M. Francia, Director IV, lnformation and Publication Service, DOLE