Headline inflation was unchanged in December 2017 compared with how prices of goods and services moved in November, data released by the Philippine Statistics Authority (PSA) on Friday showed.
Inflation clocked in at 3.3 percent in December, the same level in November but faster compared with 2.6 percent in December 2016.
This brought the full-year 2017 inflation rate at 3.2 percent from 1.8 percent in 2016.
Socioeconomic Planning Secretary Ernesto Pernia said that the full-year 2017 inflation rate is well within the official target of 2.0 to 4.0 percent.
“We see inflation over the near-term to remain stable despite pressures that may be brought about by the newly enacted TRAIN program, weather patterns, and uncertainties in international oil markets,” Pernia said in a separate statement.
The Cabinet official earlier said inflation may hit 4.2 percent this year due to price pressures brought about by the Tax Reform for Acceleration and Inclusion (TRAIN) law.
Pernia, however, said that the moderate full-year inflation rate of 3.2 percent in 2017 is a good basis for maintaining the government’s inflation target at 2.0 to 4.0 percent for 2018.
“We are happy that we have stayed within the inflation target last year, and that the Development Budget Coordination Committee will likely maintain the 2 to 4 percent target range for this year until 2020,” he said.
According to the PSA, the December 2017 inflation rate was driven by faster increases in food prices such as corn, meat, fish, fruits, cereals, but tempered by lower non-food inflation such as transport, housing, water, electricity, and gas and other fuels.
To relieve the inflationary effects of TRAIN, Pernia said the government needs to amend domestic laws that will end quantitative restrictions on rice and replace them with tariffs.
“This measure will remove the policy uncertainty in rice trade and thus encourage more investments in production and post-production innovation. The revenues from the tariff can be used to fund or subsidize such innovations,” he said.
“Meantime, efforts must be made to strengthen the resiliency of farmers from extreme weather conditions to maintain the stability of food prices. One is by shifting to climate change-ready rice varieties,” he added.
The Cabinet official noted any increase in prices during the first few months of 2018 will be tempered by the decline in power rates as capacity fees from power generators fell due to fewer power outages.
The timely implementation of the “Build Build Build” Program will also be critical in bringing down electricity and transportation costs over the medium-term, he added. — VDS, GMA News