Inflation to taper off by yearend: Pernia

MANILA -- Socioeconomic Planning Secretary Ernesto Pernia is counting on the country’s inflation rate to normalize towards the end of the year after peaking this quarter. This, after price pressures accelerated to a five-year high of 5.2 percent last month.

“We expect inflation to peak in the third quarter and taper off by October, government needs to implement necessary measures, both short-term and long-term, to address the impact of inflation,” Pernia said in a press briefing on Thursday.

Pernia attributed the higher June inflation rate to faster price increases in major commodities like food, fuel and transport, as well as world oil prices, peso depreciation, and price of rice.

“We hope it’s the peak. We are hoping that it will plateau,” he said. “The world price of oil is beginning to soften and the rice tariffication law will be passed.”

The country’s chief economic planner underscored the need for the country to urgently increase the supply of goods and services, especially

food, particularly rice, which takes up a large chunk of the food budget of poor families.

“When demand outweighs supply naturally, prices go up,” he said, noting the price of rice accounts for 25 percent to 35 percent of the consumption basket.

Pernia said the National Food Authority (NFA) is already building up its rice inventory with the arrival of its imports.

He noted the country should also immediately initiate measures that will boost the productivity of the agriculture sector and address the high cost of bringing agricultural products to markets.

“These may not produce immediate results but are crucial in managing inflation over the longer term,” he added.

Pernia also cited the importance of strictly monitoring prices to avoid profiteering, implement the Pantawid Pasada program, and the public utility vehicle (PUV) modernization programs, and for Congress to prioritize the amendment of the Agriculture Tariffication Law.

“We also expect the tariffication of rice can already start because the tariffication law has been marked as urgent and we see faster action on the part of lawmakers,” he said.

Pernia said the Department of Transportation (DoTR) is committed to begin implementing Pantawid Pasada program this month.

The program provides fuel subsidies to the public transport sector amid the rising oil price.

“The DSWD (Department of Social Welfare and Development) has already begun distributing the Unconditional Cash Transfers and is committed to completing it by September... The free tuition in state universities and colleges importation takes effect this school year,” he added.

He said the Tax Reform for Acceleration and Inclusive Law (Train) law increased the take-home pay of 99 percent of income taxpayers, thus helping them cope with the rising prices of goods.

Pernia further said he remains optimistic about meeting medium-term economic growth target of 7 to 8 percent, as the country manages inflation.

January to June inflation rate averaged 4.3 percent, slightly higher than government’s target of 2 to 4 percent. (PNA)