TWO economic managers said on Friday there is no cause for alarm over the country’s inflation levels, pointing out that the government is using both monetary and nonmonetary measures available to them to keep the levels in check.
Finance Secretary Carlos G. Dominguez III said the government is not in panic mode because of inflation, pointing to a number of nonmonetary and monetary tools to keep levels in check.
“No, we are not in a major crisis. It may be a serious problem for some people, but for the nation in general it’s not a major crisis. And besides…we have a lot of tools that are available to us,” Dominguez told financial reporters on Friday.
He further pointed out that rice inflation in the previous years was even higher than what was recorded at present, citing as example the rice inflation for July 2014 — at 14 percent, compared to the 7 percent recorded now.
“I’m telling you, there is such a thing as perspective, it may look bad, but when you look at history it’s not that bad. I’m not saying it’s not bad; the rice inflation in 2014 was higher than the rice inflation now, it’s double,” he added.
Budget Secretary Benjamin E. Diokno expressed confidence that inflation will taper off during the fourth quarter of this year and revert to the government’s target of 2 to 4 percent by 2019.
“Most likely last quarter…our target is 2 to 4 percent, so we are confident that it will go back to that, especially if the price of oil in the world market would normalize. We based our projection on market assessment, including international organizations. The long-term and medium-term forecast for oil is down because countries are adopting electric vehicles, adopting more economic measures, and we are using other sources of energy,” Diokno said.
He explained that once the nine nonmonetary measures to address inflation are implemented, inflation levels may go down to about 2.4 percent.
“The impact of food, the top four, is 2.4 percent. So the previous 4 percent becomes 6.4 percent…so its total is 2.4 percent. We feel that it will normalize on the fourth quarter and then we’ll be back to the 2 to 4 percent by next year. The inflation level will decrease by 2.4 percent once implemented,” he added.
Earlier in the month, the Economic Development Cluster (EDC) unveiled measures to ease high food prices after the Philippine Statistics Authority (PSA) reported that inflation surged to a nine-year high of 6.4 percent in August.
The EDC recommended the following policy reforms to tame inflation:
- replicate the issuance of certificates of necessity to allow imports to be distributed in the wet markets in Metro Manila and to the other markets of the country;
- immediately release 4.6 million sacks of rice available in warehouses of the National Food Authority (NFA) to markets across the country and allocate 2.7 million sacks of rice to Zamboanga, Basilan, Sulu and Tawi-Tawi;
- import 5 million sacks of rice, which arrive over the next one-and-a half months, and another 5 million sacks early next year;
- to reduce the gap between the farm gate and retail prices of chicken, have the Department of Agriculture and the Department of Trade and Industry convene poultry producers and set up public markets where producers can sell this directly to consumers; and
- open the importation of sugar to direct users to moderate cost to consumers.
Economic managers also said the Bureau of Customs will prioritize the release of essential food items in the ports.