Finance, budget and NEDA “optimistic” inflation to be managed to reach 2-4% goal

July 6, 2018

The Philippines' economic managers assured Filipinos they "remain optimistic that inflation will continue to be managed to taper-off towards the year-end" to the government's 2-4 percent goal.

In a statement by the departments of finance, budget and the National Economic and Development Authority (NEDA) on Friday, the June inflation of 5.2 percent were " due to faster price increases in major commodities like food, fuel and transport."

"In turn, such increases were caused by a host of factors, including global oil prices, peso depreciation and rice prices and further amplified by the price effects of interaction among them," the joint statement said.

"While inflation may still peak in the third quarter but taper off by October, the government needs to exert all efforts to implement necessary measures, both short-term and long-term, to address the impact of inflation on both growth and people’s welfare," it said.

"We remain optimistic that we can meet our medium-term economic growth target of 7 to 8 percent, notwithstanding the growth risks that we need to manage," it said.

The joint statement said an "urgent challenge to manage inflation is actually the need to increase the supply  of goods and services, especially food—in particular, rice that takes up a large chunk of the food budget of poor families."

"Therefore, we view with urgency the need to initiate measures that will boost the productivity of our agriculture sector and address the high cost of bringing agricultural products to markets. These may not produce immediate results but they are crucial in managing inflation over the medium to longer term. In the meantime, to beef up our country’s food supply, we should maximize trade opportunities with our ASEAN partners and even beyond," the statement said.

Even as some lawmakers have been urging President Rodrigo Duterte to suspend the implementation of the TRAIN (Tax Reform for Acceleration and Inclusion) Law, the joint statement said the law raised "the take-home pay of 99 percent of income tax payers by an average of 15 percent, much higher than inflation."

"The additional revenues that we generated from the TRAIN Law will also allow us to provide free education in state colleges and universities, free irrigation for farmers, conditional cash transfers to poor families ad senior citizens, and higher salaries to government employees including uniformed men. Without doubt, these should help in coping with the rising prices of goods," it said.

The joint statement said strict price monitoring must be done to avoid profiteering and "implement the Pantawid Pasada, and the PUV modernization programs, and for Congress to prioritize the amendment of the Agriculture Tariffication Law."

"We also support faster distribution of the unconditional cash transfers to the bottom half of families numbering 10 million," it said. DMS