The country’s socioeconomic planning chief still sees the government’s two to four percent inflation target as a fighting goal, even as it continues to monitor developments abroad.
National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan told reporters in an interview last Monday that should the inflation rate breach this target, it would be a “challenge.”
“Two to four (percent) is still a fighting target. Of course, we are watching closely the developments in the Middle East, as you know. If the oil prices would be affected by the development, there would be some pressure for us,” Balisacan said.
“(In the) second half of this year, we expect the pressure from food prices to diminish, because a big part of that food inflation was imported in the sense that food prices, particularly for staple, have been rising in the world market. But for rice… that is expected to decline, to have reached its peak and start falling after June as the El Niño phenomenon is waning. Yeah, so hopefully, that is a plus factor for us,” he added.
Latest available data showed that the headline inflation increased to 3.7 percent in March from 3.4 percent in February.
For the first three months of the year, headline inflation settled at 3.3 percent, still within the government’s two to four percent target.
“It’s 3.7 percent last time so, hopefully, we get as close to that as possible (for April). What you want is to keep that within the band so that there will be not much instability in prices,” Balisacan said.
Asked about a scenario where the inflation rate breaches the government’s target this year, Balisacan said: “Of course, it’s (a) challenge because, you know, domestic consumption… (is) very sensitive to inflation and interest rates. Of course, if there is higher inflation, then that would… give a reason for the BSP (Bangko Sentral ng Pilipinas) to keep the high interest rates… but of course, there are many other factors that the BSP is watching for.”
“I think that going back to the times when inflation hit eight percent, would not be… unless something very drastic happens in the global economy. Just crossing our fingers that the conflict there, in the Middle East, will not spread far and wide. That could affect global supply chains. Because then, no one will be spared from that,” the NEDA chief said.
On Monday, the National Price Coordinating Council said the Department of Agriculture has proposed the issuance of implementing rules and regulations (IRR) of Section 9 of the Price Act to allocate buffer funds in its annual appropriations exclusively for procuring, purchasing, importing, or stockpiling essential commodities such as rice, corn, pork, sugar, onion, and fertilizer.
The buffer stocking will ensure stable supply and arrest inflation while preventing hoarding.
