NEDA Expects Inflation To Ease

The National Economic and Development Authority (NEDA) expects ease in the country’s inflation rate in the coming months.

“Given that the first quarter of the year is usually the harvest season, the planting season for vegetables, and we don’t expect any major natural disruptions during this period, I think the market should recover and I expect that inflation will start to fall in the coming months,” NEDA Secretary Arsenio Balisacan said.

Due to food price increases, the country reached a 14-year high 8.1% inflation rate in December.

“We do know very well that the basic sources of inflation were from food and energy, fuel in particular,” Balicasan said.

Balicasan also said the government learned its lesson from high inflation caused by external headwinds such as the Russian invasion of Ukraine, disruption of global trade, and domestic shocks.

“For example, when we knew that there were shortages already because of these typhoons and continuing animal diseases, we could have facilitated and [be] more aggressive in bringing in those imports,” he said.

Balicasan said the government wants timely importation of essential commodities like food based on supply and demand.

“Inflation must be under control because inflation, particularly if this is coming from food and essential commodities, will hurt the poorest sectors of our society the most,” Balicasan said.

Under the Philippine Development Plan, the government has set a 2.5% to 4.5% target for inflation this year.

Balicasan said the ease in inflation would give less pressure on the BSP to increase the policy rates.

However, Balicasan said it would have to consider developments in other countries like the US on raising policy rates.

“For so long as the US will continue to tighten their monetary policy, interest rates there will increase, and we may act accordingly to ensure we don’t have the negative external effects of those movements elsewhere,” he said.

Source: Philstar