By Chino Leyco
The rate of increase in consumer prices fell below market expectations in December, easing to its lowest level of 5.1 percent since June last year amid declining food and transportation costs.
Customers buy vegetables at a market in Manila, January 4, 2019. (Czar Dancel / MANILA BULLETIN)
While the full year 2018 average inflation settled above the Duterte administration’s target range, the government’s economic managers expect much stable price increases this year after the food supply bottlenecks have been addressed.
The Philippine Statistics Authority (PSA) announced yesterday that headline inflation last month clocked in at 5.1 percent, slower against the Bangko Sentral ng Pilipinas’ (BSP) forecast range for December of 5.2 percent to 6.0 percent.
Inflation fell below the 6.0 percent level for the first time since August in December, and marked its second straight month of declines, the PSA said.
The December figure brought the country’s full year inflation rate at 5.2 percent, above the BSP’s target of 2.0 percent to 4.0 percent and higher than the 2.9 percent uptick in the previous year.
Last year’s elevated inflation is also the highest since 2008, which averaged at 8.2 percent.
Presidential Spokesman Salvador Panelo said the inflation drop was “positive news” since it was the lowest since June 2018, which had a rate of 5.2 percent and credited the President’s action plan, including boosting supply of agricultural products which helped temper the high inflation.
“The Palace attributes this primarily to the President’s comprehension of the dynamics of Philippine economy and his corresponding actions of providing remedies to draw to a close the unease of the ordinary consumer,” he said.
“We look back on the Chief Executive’s issuance of Administrative Order No. 13 which streamlined procedures on the importation of agricultural products such as rice, as well as Memorandum Order Nos. 26, 27, and 28 which helped stabilize the prices of agriculture and fishery products at reasonable levels and maintained their sufficient supply in our markets,” Panelo said.
“The President and this Administration will not fall into complacency in balancing the country’s overall economic progress and alleviation of our people’s distress to inflation,” he said.
“Filipinos can expect that we will remain vigilant as we continue to monitor the prices of basic goods and commodities, and implement measures to further ease the burden of our countrymen,” he added.
Reacting to the news, Sen. Juan Edgardo Angara told reporters in a text message that “the slowing of inflation is welcome relief for the public after months of increasing prices. But government must not let down its guard in monitoring unscrupulous sales practices and overpricing of food, gas, diesel and other basic commodities.”
Sen. Joseph Victor Ejercito echoed Angara’s observation. “That is good news. At medyo dahan-dahan ng naka adjust ang lahat (Slowly the others are adjusting),” Ejercito said.
“That’s why we hope the government suspends the implementation of the second round of excise taxes on fuel),” he added.
Food and alcohol
Data from the PSA showed slowdown of inflation in December was mainly driven by the slower price increases in food and non-alcoholic beverages at 6.7 percent and transport at 4.0 percent.
Last month, prices of alcoholic beverages and tobacco jumped 21.7 percent year-on-year; housing, water, electricity, gas and other fuels at 4.1 percent; furnishing, household equipment and routine maintenance of the house at 3.8 percent; and restaurant and miscellaneous goods and services at 4.3 percent.
On the other hand, higher price mark-ups were noted last month in clothing and footwear at 2.8 percent while health at 4.8 percent.
In Metro Manila, inflation further slowed down to 4.8 percent in December from 5.6 percent in November, but still quicker than the 4.2 percent registered in the month in 2017.
Meanwhile, in areas outside Metro Manila, inflation also continued to move at a slower pace of 5.3 percent from 6.2 percent in the previous month and in December 2017, 2.5 percent.
In a joint statement by the National Economic and Development Authority (NEDA), Department of Finance (DOF) and Department of Budget and Management (DBM), the economic team noted that the slower inflation signified that the administration’s mitigating measures are already in force and broadly effective.
“The rate of price increases has remained manageable, giving the country adequate elbow room to sustain its economic growth and reach its development goals,” the statement read.
“Still, we understand that the faster inflation particularly in the middle of 2018 had affected many Filipinos, most especially those in the disadvantaged sectors. For this very reason, the economic team took swift and decisive measures to tame inflation as directed by the President,” it added.
“Nonetheless, we continue to exert all efforts to bring inflation within the government’s target range of 2 to 4 percent, and ensure price stability all year round,” the economic team said.
The Duterte administration’s economic team is composed of Budget Secretary Benjamin E. Diokno, Finance Secretary Carlos G. Dominguez III and Socioeconomic Planning Secretary Ernesto M. Pernia.
“While we can say that the worst seems over given the signs of easing price pressures, we continue to be vigilant of possible risks,” they said.
For 2019, the government expects rice prices to decline by as much as P7.00 per kilo following the signing of the Rice Tariffication bill.
“As we welcome 2019, we assure the general public that our dedication and commitment to our collective long-term vision of a good life for all remain undiminished,” the three Cabinet officials said. (with reports from Genalyn D. Kabiling and Hannah L. Torregoza)