Pernia on inflation

The little bit of good news is that year-to-date inflation (January to June 2018) rate is 4.3 percent, juts slightly higher than government’s target of 2 to 4 percent.

However, the unwelcome news is that inflation rate in June 2018 reached 5.2 percent, due to faster price increases in major commodities like food, fuel and transport, as well as host of factors, such as world oil prices, peso depreciation, and price of rice.

Nevertheless, we remain hopeful that inflation is kept at bay and will taper off by year-end.

While we recognize the public sentiment on rising prices, let us remind ourselves that the TRAIN Law increased the take-home pay of 99 percent of income tax payers. And this should help in coping with the rising prices of goods.

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.

An important and urgent challenge to manage inflation is actually the need to increase the supply of goods and services, especially food—in particular, rice, which takes up a large chunk of the food budget of poor families. When demand outweighs supply, naturally prices go up.

Thus, we view with urgency the need to initiate measures that will boost the productivity of our 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. In the meantime, to beef up our country’s food supply, we should maximize trade opportunities with our ASEAN partners.

Also, we need to strictly monitor prices to avoid profiteering, implement the Pantawid Pasada, and the PUV modernization programs, and for Congress to prioritize the amendment of the Agriculture Tariffication Law. We also support the DOLE’s proposal of providing unconditional cash transfers to minimum wage earners.

Meanwhile, let me share some good news as well. We see a growing manufacturing sector, which bounced back in May 2018 with increases in production volume and value. We call on the private sector to continue investing to further increase productivity. Such investments will greatly contribute to employment and income growth of our labor force.

On the part of government, we remain committed to addressing factors that could hamper growth like rising trade tensions and higher interest rates. It is important to enhance the production capacity of enterprises, to address infrastructure gaps to decrease production costs, and to provide workers with necessary knowledge and skills.

The recently signed Ease of Doing Business Law will help especially small and medium enterprises and will fur- ther boost the manufacturing sector.

We have foreseen the inflation risks and that is why we have designed mitigating measures to cushion the impact. We have the assurance of our colleagues from implementing agencies that will act swiftly on these measures. The DSWD has already begun distributing the Unconditional Cash Transfers and is committed to completing it by September. The DoTR is committed to begin implementing Pantawid Pasada this month. The free tuition in state universities and colleges importation takes effect this school year. The NFA is already building up its rice inventory with the arrival of its imports. The minimum wage is also now being discussed by the Regional Wage Boards. To date, six regions have already issued wage orders, awaiting the next steps.

With these measures, we expect inflation to normalize by the end of the year. We remain optimistic that we can meet our medium-term economic growth target of 7 to 8 percent, even while taking note of growth risks that we need to manage.

Rest assured that we will be on the forefront of monitoring inflation, and we will ensure that issues are addressed.