THE Bangko Sentral ng Pilipinas (BSP) is seeing lower annual inflation rates for the rest of 2018 until the next two years.
BSP Deputy Governor Diwa Guinigundo on Friday, Nov. 9, told Cebuano stakeholders that the 2018 inflation rate is not expected to be persistent and recurrent in the next two years, as the country’s inflationary environment has already shown significant deceleration.
During the Sulong Pilipinas 2018-Philippine Development Forum: Hakbang Tungo sa Kaunlaran held at the City Sports Club Cebu, Guinigundo highlighted that inflation for the past 10 months has been supply-driven, with increases in oil prices in the global market as one of the major contributors.
“We are not expecting the inflation rate this year to replicate in 2019 and 2020,” said Guinigundo.
Recent developments both in external and internal fronts have shown signs of improvement.
He explained they are seeing prices of fuel in the world market going down, impact of the Tax Reform for Acceleration and Inclusion (Train) Law tapering off, stable rice supply in the market, and the government implementing mitigating measures to temper inflation.
Guinigundo expects consumer spending in the last quarter of the year to remain robust now that inflation is easing.
“This reflects the result of the Consumer Expectation Survey that showed consumers are now more optimistic in the last quarter of the year, precisely because of the holiday, start of the harvest season, and the implementation of public and private projects, which all mean jobs,” said Guinigundo.
October inflation remained steady at 6.7 percent. Consumer prices peaked at 6.9 percent in August.
Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.
Average inflation rate in the last 10 months stood at 5.1 percent.
The BSP expects to end the year with a 5.2-percent inflation rate and 4.3 percent (from 3.7 percent) and 3.2 percent respectively, for 2019 and 2020.
If the Rice Tariffication Bill is approved by Congress during this fourth quarter of 2018, Guinigundo said inflation in 2019 is expected to further decline by 0.7 percentage point.
The tariff bill is expected to reduce rice prices by P2 to P7 per kilo and enhance the productivity of farmers through its tariff revenues, which will be given to them to improve their performance.
Guinigundo emphasized that despite the domestic pressures and softening of the global market, the country is poised to continue its healthy growth story.
He said the country has enough buffers for the next 10 years for it grow inclusively and to continue its growth momentum.
Filipinos, he said, can bank on the country’s positive economic growth in the last 76 consecutive quarters or 19 consecutive years, a testament of how resilient the country is amid global and domestic pressures.
Sulong Pilipinas is an annual consultative conference between the Duterte administration and the private sector. After Cebu, the government’s economic team will go to San Fernando in La Union, Clark in Pampanga, and Davao City.