Salceda: Eased inflation both good and bad news

The easing of the inflation rate in March at 7.6% from 8.6% in February is good news due to lower food prices but high sugar prices still poses risk, among others, House ways and means panel chairperson Joey Salceda said Wednesday.

“Inflation levels going down in March gives us ample room to absorb potential shocks in the global monetary and financial environment. It also anchors inflation expectations, allowing businesses and consumers to make firmer decisions about their spending and investing activities this year,” Salceda said in a statement.

“The good news is, food is significantly cheaper this month compared to last month, with a month-on-month inflation rate of -1.2%. Vegetables, in particular, are 14.1% cheaper this month compared to last month. Corn is also cheaper, albeit at a slower at -0.7% month-on-month inflation rate,” he said.

Salceda also noted that onion farmgate prices have hit the P50 per kilo range in many areas, and that rice’s year-on-year inflation only reached 2.6% which is within the Bangko Sentral ng Pilipinas (BSP) target due to the law on rice import liberalization.

“We have to watch out to make sure the price increases, if needed, are not above necessary. Moving forward, El Niño is the main upside risk. Irrigation maintenance and coverage will be critical,” he said.

“To this effect, I reiterate my request to President (Ferdinand) Marcos Jr. that directives to the water management agencies be formalized in an executive order,” he added.

He also cited the livestock sector which posted the lowest year-on-year inflation rate among all food items at 4.6% and its month-on-month inflation rate only reaching at -0.2%.

Salceda, however, warned that sugar’s 35% year-on-year inflation rate when global sugar inflation levels are close to 8.5% is already alarming.

“That [sugar inflation] is an untenable situation for food and beverage manufacturing. If we continue to avoid difficult reforms in this area, we will continue to pay the price,” he added.

He then cited corn, flour and bread registered 11.7% year on year inflation, respectively and such figures are likely to persist due to El Niño and the ongoing war between Russia and Ukraine.

Salceda said fish and the rest of seafood prices remain high at 9.9%, and could be higher in the months to come.

"There is reason to believe that inflation in this area will be higher by April, due to the Mindoro oil spill as well as the generally warmer climate,” he said.

He was referring to the oil spill that caused sinking of motor tanker (MT) Princess Empress last February 28 in the waters off Naujan, Oriental Mindoro. At that time of its sinking, it was carrying at least 900,000 liters of industrialized fuel.

With the way things are going, Salceda said the inflation rate will meet targets set by the Bangko Sentral ng Pilipinas only by October.

“I sustain my observation that general price levels will continue to decline moving forward. We will hit BSP inflation targets by October, if not earlier. But the annual average price levels are likely to be above 5% for the full year 2023,” he added.—AOL, GMA Integrated News