Economic planners of the Duterte administration are confident they could bring down inflation to 3.2 percent in 2019, Socioeconomic Planning Secretary Ernesto Pernia said yesterday.
In an interview over OneNews’ “Agenda” hosted by Cito Beltran, Pernia said the government is initiating moves to temper the runaway inflation that hit 5.2 percent in June, exceeding the 4.3 to 5.1 percent forecast by the Bangko Sentral ng Pilipinas (BSP) and the 4.9 percent outlook of the Department of Finance (DoF).
“Three factors affected inflation in June. The rapid economic growth, the rising petroleum prices and the sudden increase in rice prices,” Pernia said.
However, Pernia said the government is already addressing the rice distribution issue with the arrival of imported grains from Vietnam and Thailand. President Rodrigo Duterte ordered a 60-day buffer stock of rice to bring down prices of price of commercial rice in the market with the availability of NFA (National Food Authority) rice at only P32 per kilogram.
The mismanagement of the previous administration of the country’s rice supply triggered prices to shoot up in May, which added to inflationary pressures, Pernia added.
He maintained the June inflation is still manageable and added it is still relatively low compared with the double-digit inflation during the Arroyo administration.
Meanwhile, the BSP predicted inflation to peak in the third quarter before slowing down in the fourth quarter and eventually reach its target next year.
Trade analysts said the fast-rising inflation adds pressure on the BSP to raise interest rates for a third time this year that follows the total 50-basis point hikes since May. A third rate hike is expected to be announced in August to ease inflationary pressures, it was learned.
Joey Cuyegkeng, a senior economist at the Manila unit of the Dutch financial services giant ING Group, said the accelerating inflation in June would “likely require further monetary response as early as the August meeting.”
Cuyegkeng described the real policy rate, “as deeper in the red, indicating that a more aggressive economic policy response would be needed” than that allowed by the BSP at present. He placed the present real policy rate at minus 1.7 percent versus only minus 0.4 percent in January.
Pernia earlier said the government needs to implement necessary measures, both short-term and long-term, to address the impact of inflation.
“We hope it’s the peak. We are hoping that it will plateau,” he said at a news conference last week and added, “The world price of oil is beginning to soften and the rice tariffication law will be passed.”