APD | Philippine inflation down to 3.8 percent in February 2019

By APD writer Melo M. Acuna

MANILA, March. 5 (APD) – The country’s economic managers reported that the country’s inflation rate slid to 3.8 percent in February as price levels began to normalize and settle back to the government’s target.  This is lower than the 4.4 percent rate in January, which according to them, “shows the government’s resolve along with the appropriate measures to rein in inflation.”

This brings the year-to-date average inflation to 4.1 percent, which is now only 0.1 percentage point above the higher end of the government’s inflation target range.

“We are confident that the successive reforms recently rolled out will sustain this environment and support the growth of the Philippine economy,” the economic managers, composed of Secretaries Carlos Dominguez III of the Department of Finance, Benjamin Diokno of the Department of Budget and Management and Ernesto M. Pernia of the National Economic and Development Authority in their statement released today.

Except for communication-related expenses, slower price increases in most commodity groups were recorded.  In particular, inflation of food and non-alcoholic beverages eased to 4.7 percent in February 2019 from 5.6 percent in January 2019, slightly lower compared to the 4.8 percent in the same month last year.  On a month-on-month, seasonally adjusted basis, food prices posted nil growth for the second consecutive month.

Inflation in Metro Manila decelerated to 3.8 percent in February 2019 from 4.6 percent in January 2019 and 4.7 percent in February 2018.  This is the lowest rate recorded in the last 18 months.  All regions exhibited slower overall inflation rates.

“We are optimistic that the downward path of inflation will continue for the rest the year.  This will be backed by the recent enactment of the Rice Industry Modernization Act (RA 11203), which is expected to bring down rice prices and cut inflation by 0.5 to 0.7 percentage point this year and 0.3 to 0.4 percentage point next year,” they further said.

Rice inflation moderated to 2.9 percent from 4.7 percent in January 2019 on the back of stable rice supply.  According to the monitoring activities of the Philippine Statistics Authority, prevailing retail prices of regular-milled rice has now declined by around P 5.00 since it peaked in September 2018.

The economic managers said they must ensure that the change to a rice tariff regime, from government-led to market-led is seamless and fast.  They said the crafting and promulgation of the Implementing Rules and Regulations  (IRR) of the new law, as part of the first steps, are now underway.  The new regime will include the operationalization of a National Single Window system, which they said will facilitate seamless transactions.

However, they expressed concern about the existence of the El Niño which may affect food production as according to government weather specialists projected will prevail until June 2019.  About 19 provinces are expected to experience drought this year including Metro Manila.  It is expected the government will take pro-active measures to mitigate its adverse impacts on the agriculture secto0r in the immediate term and increase its resiliency against extreme weather conditions over the medium to long term.

They also assured the general public they will remain watchful of developments in the global oil market.  “While prices have already gone up by around P7 to 8 since January this year, current domestic fuel prices are still relatively lower compared to pump prices in 2018, even including the second round of increases in fuel excise tax this year.

There was a sharp deceleration of inflation for transport to 1.2 percent in February 2019 from 2.5 percent in the corresponding month last year despite the increase in fuel excise tax.

They also guaranteed affected transport workers of the subsidy under Pantawid pasada to temper the possible demand for increase in transport fares should oil prices continue to rise.

“Inflation is again starting to become manageable.  While we constantly keep a close watch on the general prices of goods, we can now pay greater attention to programs that will further propel economic growth and help us reach our long-term development goals,” the economic managers concluded.  

(ASIA PACIFIC DAILY)