NEDA: Inflation rate was 3.2% in 2017
The country ended 2017 with steady full-year inflation performance at 3.2 percent, which is well within government’s target for the year, the National Economic and Development Authority (NEDA) said.
Based on a report of the Philippine Statistics Authority (PSA), headline inflation rate for December 2017 remained at 3.3 percent, similar to that of November—closing 2017 with a full-year rate of 3.2 percent.
Inflation in December 2017 was due to faster increases in food prices (corn, meat, fish, fruits, cereals), but tempered by lower non-food inflation (transport, housing, water, electricity, gas and other fuels).
“We see inflation over the near-term to remain stable despite pressures that may be brought about by the newly enacted TRAIN program, weather patterns, and uncertainties in international oil markets,” Socioeconomic Planning Secretary Ernesto M. Pernia said.
Pernia added that the moderate full-year inflation rate of 3.2 percent in 2017 is a good basis for maintaining the government’s inflation target at 2.0 to 4.0 percent for 2018.
NEDA also said supply conditions, particularly of major agricultural commodities appears favorable within the near term. The crop outlook according to the PSA as of October 2017 indicates increases in harvest areas across regions, attributed mainly to sufficient water supply and government interventions such as the continued provision of high- yielding seed varieties and fertilizer support
To relieve the inflationary effects of TRAIN, Pernia said that the government needs to prioritize amending domestic laws that will end quantitative restrictions on rice and replace them with tariffs.
“This measure will remove the policy uncertainty in rice trade and thus encourage more investments in production and post-production innovation. The revenues from the tariff can be used to fund or subsidize such innovations,” Pernia added.
“Meantime, efforts must be made to strengthen the resiliency of farmers from extreme weather conditions to maintain the stability of food prices. One is by shifting to climate change-ready rice varieties,” Pernia said.
The Cabinet official noted that any increases in prices in the first few months of 2018 will be tempered by the expected decline in power rates as capacity fees from power generators fell due to fewer power outages.
He added that the timely implementation of the “Build Build Build” Program will also be critical in bringing down electricity and transportation costs over the medium-term.
“We are happy that we have stayed within the inflation target last year, and that the Development Budget Coordination Committee will likely maintain the 2 to 4 percent target range for this year until 2020,” Pernia said.