Inflation is likely to continue its downward path for the rest of the year given recent developments in the country, members of the government’s economic cluster said Tuesday.
“[W]e are optimistic that the downward path of inflation will continue for the rest of the year,” the Departments of Finance and Budget and Management, as well as the National Economic and Development Authority (NEDA), said in a joint statement.
The Philippine Statistics Authority (PSA) earlier on Tuesday reported inflation at 3.8 percent in February, marking the fourth consecutive month of deceleration.
“We, the economic managers, are pleased by the report that the country’s inflation rate slid further to 3.8 percent in February as price levels start to normalize and settle back to the government’s target,” the economic cluster said.
“This will be backed by the recent enactment of the Rice Industry Modernization Act (RA 11203), which is expected to bring down rice prices and cut inflation by 0.5 to 0.7 percentage points this year and 0.3 to 0.4 percentage points next year,” it explained.
The Rice Tariffication Law also allows the unlimited importation of rice as long as private sector traders secure a phytosanitary permit from the Bureau of Plant Industry and pay the 35-percent tariff for shipments from neighbors in Southeast Asia.
The law earmarks P10 billion for the Rice Competitiveness Enhancement Fund (RCEF), of which P5 billion will be allotted to farm mechanization and P3 billion to seedlings. The fund intends to ensure that rice imports won’t drown out the agriculture sector and rob farmers of their livelihood.
“Based on the monitoring of the Philippine Statistics Authority, prevailing retail prices of regular-milled rice has now declined by around PhP5.00 since it peaked in September 2018,” the statement read.
“Our work does not stop here. We must ensure that the change to a rice tariff regime—from government-led to market-led—is seamless and fast,” it added.
In terms of the expected El Niño which the state weather bureau PAGASA forecasts to come in during the first quarter, the economic team said the government must take steps to strengthen the agriculture sector.
“Around 19 provinces are expected to experience drought this year including Metro Manila,” the economic team said.
“Thus, the government must take pro-active measures to mitigate its adverse impacts on the agriculture sector in the immediate term and to increase its resiliency against extreme weather conditions over the medium to long term,” it added.
The economic cluster said it will also remain watchful of developments in the global oil market, as it noted that the Land Transportation Franchising and Regulatory Board (LTFRB) should increase its efforts to cover more of the targeted beneficiaries of the Pantawid Pasada Program.
“Nevertheless, the economic team is upbeat that inflation is again starting to become manageable,” it said.
“While we constantly keep a close watch on the general prices of goods, we can now pay greater attention to programs that will further propel economic growth and help us reach our long-term development goals,” the statement added.
For his part, Bayan Secretary-General Renato Reyes noted that while the recent inflation figures are welcome, this should be made sustainable.
“Inflation could have been lower if the excise tax on fuel was removed. This comprises a staggering P9 per liter for gasoline. The erosion of income last year cannot be recovered by the easing of inflation now,” he said in a separate statement.
“We thus maintain that candidates seeking Senate and congressional seats should be asked whether they are in favor of removing excise tax on petroleum products,” he added.
The Tax Reform for Acceleration and Inclusion (TRAIN), signed into law by President Rodrigo Duterte in 2017, also provides that starting 2019, excise taxes for diesel be hiked by a total of P4.50 and those of gasoline by P9.00 under the second tranche.
“The TRAIN Law green remains an important issue even during the elections,” said Reyes. — BM, GMA News