2018 inflation rate Diokno says ‘no need to adjust inflation target’
MANILA -- Budget and Management Secretary Benjamin Diokno is confident that the inflation rate at the end of this year will settle within the administration’s target of 2 to 4 percent, as price pressures as expected to taper off in the coming months.
Diokno said average inflation rate from January to May is at 4.1 percent, a little over the inflation guidance, following the 4.6-percent headline inflation rate recorded last month.
“No need for us to adjust inflation target,” said Diokno in a press press briefing Tuesday.
He noted that monthon-month inflation rate has been tapering off since it peaked last March. It started to ease in April and continued to temper last month.
The Department of Budget and Management (DBM) chief cited factors to the positive outlook on inflation in coming months, which include improving world oil prices and lower prices of rice if the rice tariffication bill is passed by Congress.
Data from the National Economic and Development Authority (Neda) showed that surging pump prices in the past months have driven inflation pressures.
In the previous month, petrol prices have reached their peaks since January 2016. Common prices per liter of unleaded gas has gone up to P56.59, diesel at P43.66, and kerosene at P50.67.
Domestic petrol prices only followed the movement of oil prices in the world market. Dubai crude oil price further climbed to US$74.41 per barrel in May from US$68.27 per barrel in April.
But Neda Undersecretary Rosemarie Edillon said world oil prices are expected to decline in the coming months, as oil producing countries are pressured to ramp up their production. As this is on the horizon, this is projected to slow down inflation rate for the country in the coming months.
“We’re hoping that OPEC (Organization of Petroleum Exporting Countries) countries will come to a decision to increase production. And surely, there’s actually pressure for them to increase production. And of course there is the shale oil producers,” said Edillon.
This week, oil companies implemented rollback on fuel prices -- P1.20 per liter for gasoline, P0.90 per liter for diesel, and P1 per liter for kerosene.
Edillon said the Philippines also has lessen its dependence on oil for power generation, since the country now has more sources of energy.
Moreover, the government is also banking on the passage of the bill amending the Agricultural Tariffication Act of 1996, which will replace quantitative restrictions on agricultural products including rice, with tariff. This will greatly contribute to the reduction of prices of rice in the domestic market.
According to Edillon, the country has not benefited with the improving rice prices in the international market due to this regulation. Retail price of regular milled rice in the Philippines is pegged at P38.25 per kilo, whereas Vietnam only pay half of the price or P19 per kilo of the same commodity.
“We also want to request our legislators to fast-track the enactment of rice tariffication bill, because really, the Filipinos pay almost twice as much for rice compared to other countries,” Edillon said.
She also cited that 72 percent of Filipinos are net consumers of rice, while poor Filipino families spend 20 percent of their budget on rice alone. Thus, the passage of the bill is expected to help in easing inflation pressure among poor Filipinos.
Diokno noted that with the passage of the bill, prices of rice in the local market is expected to be reduced by P7 per kilo.
“The government is closely monitoring and taking steps to address the difficulties experienced by Filipino families today arising from higher prices,” Diokno read the joint statement of DBM, Neda, and the Department of Finance. (PNA)