THE Department of Finance (DOF) said inflation in March will remain below 4 percent if the average month-on-month (MoM) change in the prices of goods will not breach 0.6 percent.
“For inflation to stay below 4 percent in March, MoM price change should be at the most 0.6 percent,” the DOF said in its economic bulletin.
At a 0.6-percent hike in the prices of commodities, the DOF sees an inflation rate of 3.9 percent in March and 4 percent in April. Inflation in March and April will settle at 3.8 percent if prices would increase by only 0.5 percent. The target inflation rate of the government for 2019 is 2 to 4 percent.
“[It’s] very important to stay under 4 percent or within government target [for inflation] since [a higher rate] would mean more burden on the poverty-stricken regions and higher operating costs for both the public and the private sectors,” said Asian Institute of Management (AIM) Associate Professor Emmanuel A. Leyco.
The Philippine Statistics Authority (PSA) reported on Tuesday that the country’s inflation rate fell to 3.8 percent in February from 4.4 percent in January, driven by higher prices of fish, alcoholic beverages and tobacco.
“Sin products and non-alcoholic beverages continued to rise MoM and contributed a total of 0.6 percentage points YoY [year-on-year] inflation. Excluding these unhealthy products, YoY inflation would have risen by only 3.2 percent,” the DOF added.
The DOF said inflation will decline further due to the government’s implementation of measures that eased supply-side pressures.
“The supply-boosting measures approved by the President last year continue to dampen inflationary pressures. The implementation of the rice tariffication law will further trim down inflation,” the economic bulletin read.
“In addition, the interest rate adjustments implemented by the BSP will further bring down aggregate demand and trim inflation to the lower end of the range,” it added.
The President signed into the law the rice trade liberalization law, or Republic Act 11203 in February. The law aims to further open up the country’s rice market as it converted quantitative restrictions (QR) on rice into tariffs.
With the law in place, economic managers expect domestic rice prices to go down by P4 to P7 per kilogram.
Inflation is the rate at which the average price level of commodities and services in an economy increases over a period of time, and often indicates a decline in the economy’s purchasing power.
Core inflation for February settled at 3.88 percent, lower than the 4.35 percent in January. Core inflation is the change in costs of goods and services under the consumer price index, excluding those from the food and energy sectors. “Core inflation of 3.9 percent suggests that in the coming months, headline inflation may stay below 4 percent,” it added.