Economic managers say “worst seems over” after December inflation eases

January 4, 2019

The country's economic managers said in a joint statement on Friday said the low December inflation rate is welcome news, vigilance is needed.

While we can say that the worst seems over given the signs of easing price pressures, we continue to be vigilant of possible risks," the economic managers said.

The officials referred to are Finance Secretary Carlos Dominguez III, Budget Secretary Benjamin Diokno and Socioeconomic Planning Secretary Ernesto Pernia.

December inflation rate came to a seven-month low at 5.1 percent sharply down from November’s 6 percent.

"With this, full-year 2018 inflation averaged at 5.2 percent, which is higher than last year’s 2.9 percent inflation but within the adjusted inflation forecast of the Development Budget Coordination Committee," the statement said.

''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,'' it added.

"Though the pace of price increases has remained manageable...  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," the economic managers said.

With the expected signing into law of the Rice Tariffication Bill, rice prices are expected to decline by as much as P7.00 per kilo, they said.

"We recognize, however, that this favorable effect can only be sustained if there are more players in the rice market, starting from production and financing to post harvest and trading," the managers said.

Ensuring sufficient supply of rice and other major agricultural products from local sources likewise remains crucial over the near term with the looming El Niño phenomenon in 2019.

The economic team will aggressively push for the full operationalization of the National Single Window.  At the same time, the government pledges to step up its anti-smuggling measures, aiming that only duly-taxed imports enter the country.

In the fisheries sector, the government is strengthening its crackdown against illegal fishing. Ten out of the 13 fishing grounds in the Philippines were reportedly over fished. This effort must be accompanied by sustainable coastal resource management to help increase fish production.

The economic managers said they "advise the Department of Agriculture to hasten the issuance of the Fisheries Administrative Order No. 259 to compensate for the limited supply as some parts in the Visayas are under closed fishing season."

While pump prices have been falling for the past two months, the Department of Energy is making sure the new excise tax on oil is not yet reflected  at the start of the year, as old fuel inventories are not subjected to the tax increase, the economic managers said.,

The Cabinet members ask "concerned government agencies to fast-track the implementation of the mitigating measures scheduled this year under the Tax Reform for Acceleration and Inclusion Law, particularly the unconditional cash transfer and fuel vouchers.'

These could fend off possible second-round effects, which may arise from further demand for wage and fare increases, the officials said. DMS