Inflation remained at 3 percent in February, the same rate in January, as food, beverage and tobacco registered slower price increases, the Philippine Statistics Authority said Friday.
The PSA said the February inflation was slower than 4.2 percent registered in the same month last year. The figure brought inflation in the first two months to 3 percent, representing the midpoint of the target range of 2 percent to 4 percent for the year.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the February inflation was within the BSP’s forecast range of 2.8 to 3.6 percent for the month.
“Inflation is seen to accelerate over the near term due to higher oil prices as well as the impact of positive base effects. Nonetheless, the BSP’s full-year inflation forecasts continue to show that inflation would average within the 2-4 percent target range for 2022-2023 as government direct measures help address the supply constraints,” Diokno said.
“However, the recent uptick in global crude oil prices due to geopolitical tensions have raised global and domestic macroeconomic uncertainty over the near term,” he said.
Diokno said that under these circumstances, the BSP would continue to closely monitor the emerging risks to the outlook for inflation and remain vigilant against possible second-round effects from supply-side pressures or any shifts in the public’s inflation expectations.
“The BSP supports the implementation of non-monetary measures by the national government to help mitigate the impact of higher oil prices and avoid the broadening of price pressures. On the part of the BSP, it continues to have a wide arsenal of policy instruments to respond to possible adverse impact of this external shock,” he said.
The Monetary Board will review its assessment of the inflation outlook along with the latest global and domestic developments in its monetary policy meeting on March 24, he said.
Meanwhile, the government stands ready to help Filipinos from the economic impact of the Russia-Ukraine conflict, according to the National Economic and Development Authority.
Data showed that food inflation decreased to 1.1 percent in February from 1.6 percent in January. This was driven by slower inflation rates for meat, at 1.4 percent from 4.3 percent, and fish, at 2.9 percent from 6.2 percent. However, corn inflation significantly increased to 31.3 percent from an already elevated 27.7 percent.
Non-food inflation increased to 4.1 percent in February from 3.8 percent in January, mostly due to rising oil prices. Specifically, electricity, gas, and other fuels for household inflation accelerated to 12.8 percent, and private transport inflation increased to 29.8 percent.
Public transport inflation remained muted at 0.9 percent as fares are regulated.
Despite the stable inflation rate, Economic Planning Secretary Karl Kendrick Chua said commodity prices were increasing amid the conflict between Russia and Ukraine. To address this, Chua said the government would use its available resources to provide targeted subsidies to the affected sectors.
He said the government would continue its efforts to increase food supply by helping farmers improve their productivity and importing, when necessary, to fill supply gaps.
“Prices of commodities, such as oil, wheat, and corn, are going up as demand outpaces supply. That is why we need to proactively manage the impact on the people through these two measures,” Chua said.
The Development Budget Coordination Committee earlier affirmed that the government was preparing to release P2.5 billion for the fuel subsidy program that covers drivers of jeeps, buses, UV express, transport network vehicle services and tricycles.
The Department of Agriculture has a budget of P 500 million to provide assistance through fuel discounts to farmers and fisherfolk who either individually own and operate agricultural and fishery machinery, or operate through a farmers organization or cooperative.
NEDA said it strongly supports the proposed livestock development and competitiveness bill to help improve the efficiency of the entire value chains for the livestock, poultry and dairy sectors. These will help ensure the adequate and affordable supply of these food products in spite of rising input prices.
Chua said to help insulate the economy from external shocks from the Russia-Ukraine crisis, the shifting of the entire country to Alert Level 1 and full resumptions of face-to-face learning would be necessary.
NEDA estimates that shifting the entire country to Alert Level 1 would generate P16 billion of economic activity per week and would translate into 297,000 less unemployed over the next quarter.
The full resumption of face-to-face learning is expected to increase economic activity by P12 billion a week with the return of services around schools such as transport, dormitories, food stalls and school supplies stores, among others.
“We need to move the entire country to Alert Level 1 and fully reopen schools as soon as possible. This will enable more people to earn income and strengthen our domestic economy amid upward price pressures due to global political tensions,” said Chua.
Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said for the coming months, the continuation of accommodative monetary policy especially sustaining the key local policy rate at the record low of 2 percent remained possible.
“But any further cut in large banks’ RRR [from the current 12 percent] would likely be deferred until inflation stabilizes further; as the economy needs all the support measures that it could get at this time largely due to the adverse economic effects of the COVID-19 lockdowns/pandemic from 2020-2021,” he said.
Ricafort said limits on government funds for additional economic stimulus measures at the moment, especially with the country’s debt-to-GDP already at a 16-year high of 60.5 percent as of end-2021 (or since 2005 when it reached 65.7 percent) already within the acceptable international threshold of 60 percent, would put greater onus on more accommodative monetary policy measures to do more heavy lifting for the economic recovery initiatives.
