Aim for 2.4 percent inflation

 

 

By Rose de la Cruz

 

While acknowledging the feat of 3.3 percent in March 2019, Rep. Henry Ong, 2nd district of Leyte and chair of the committee on banks and financial intermediaries, is asking the economic team to aim for 2.4 percent inflation, a level achieved in July 2017.

 

Ong urged the Department of Agriculture to have the Rice Fund ready as a safety net for farmers and drought relief be put in place this El Nino summer.

 

"The 2.4 percent we had in July 2017 is the proper benchmark because government has been working hard to rein in inflation ever since then. That was just before rice supply problems reared its ugly head and sent prices soaring until late 2018. ," said Ong citing official statistics.

 

"Economic managers told Congress rice prices could fall by P7 at retail and at least P10 billion pesos was assured for the Rice Fund as safety net for farmers. I will hold them accountable for that pitch they used to make Congress approve the removal of rice import quotas," Ong, Member of the House Committee on Economic Affairs said.

 

"With the adverse impact of drought on harvests this summer, it would be prudent for the Agriculture Department to make sure the P10 billion is ready in time for the next planting season. Not part of that Rice Fund are funds for drought relief, so the DA and other agencies should source those relief funds from elsewhere," the congressman said.

 

BSP view on inflation

 

The Bangko Sentral ng Pilipinas said the the  latest  inflation  outturn  is  consistent  with  the BSP’s expectations that inflation will continue to settle within the target range for  2019  and  2020.

 

However, the possibility of a stronger and prolonged El Niño episode together with the continued rise in global crude oil prices provide upside price pressures over the near term.

 

Meanwhile, the potential slowdown in domestic economic activity due to the budget impasse as well as continued uncertainty in the global economic environment could present downside risks to inflation.

 

Against this backdrop, the  BSP continues to keep a close watch over price developments in the country  and  shall consider all relevant information at its next monetary  consider  all  relevant  information  at  its  next  monetary  policy  meeting  on  9  May 2019  to  ensure  that  the  monetary  policy  stance  remains  consistent  with  the  BSP’s primary mandate  of price stability.”

 

Headline inflation slowed down to 3.3 percent year-on-year in March 2019 from 3.8 percent in the previous month. The resulting year-to-date average of 3.8 percent is now within the Government's inflation target range of 3.0 percent ± 1.0 percentage point for the year.

 

Core inflation—which excludes selected volatile food and energy items to measure underlying price pressures—has also eased to 3.5 percent in March from 3.9 percent in February. Month-on-month seasonally-adjusted headline inflation was unchanged at 0.1 percent in March 2019 compared to the previous month's level.

 


Year-on-year inflation rate of key food commodities such as fish, fruits, and vegetables slowed down in March while rice inflation decelerated with the onset of the summer harvest season and continued arrival of rice imports. At the same time, slower price increases of large-weighted non-food items such as housing, water, electricity, gas, and other fuels along with restaurant and miscellaneous goods and services also contributed to the slowdown in overall 
inflation during the month, offsetting the impact of higher international oil prices. 

The latest inflation reading is consistent with the BSP's expectations that inflation will continue to settle within the 2-4 percent target range for 2019 and 2020. The BSP will continue to monitor emerging price and output conditions to ensure price stability conducive to a balanced and sustainable economic growth. 

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