AN investment expert is optimistic that lower inflation in succeeding months may also facilitate the normalcy of the economy after the coronavirus disease (Covid-19) pandemic.
The Philippine Statistics Authority (PSA) has recorded a drop in the inflation in Davao Region at 2.2 percent in March from 2.4 in February.
The PSA noted that it is significantly lower compared to 4.2 percent in the same period last year.
Roberto Marco Samson, First Metro Securities Brokerage Corporation (FirstMetroSec) business development section head, said it is possible that inflation in Davao Region will be a further slowdown in April.
“This is because economic activity is surely down for the month and this is certainly mainly due to the ECQ (enhanced community quarantine) and its subsequent extensions,” he said.
He said the situation is expected to affect consumer behavior.
“Given the nature of the pandemic, businesses should probably expect consumers to be very cautious, especially within the first few months of the relaxing of the CQ (community quarantine) guidelines.
“Consumers will likely only spend on the necessities and will try avoiding going out as much as possible. This will all lead to slower recovery for businesses. Tourism will likely be affected as well, as these are not necessarily priority areas right now,” he said.
Samson also foresees that the government will ease the quarantine measures gradually to avoid a second wave of the pandemic.
This, he said, would also dictate the spending behavior of the people.
“Even if people have enough money to spend, they might not be able to do so yet.
However, he said the lower inflation would also help facilitate the normalcy of the economy.
“In a way, it might be beneficial in the short-term since prices are lower right now. Businesses might be forced to sell at lower prices for now in order to unload inventory and to generate more sales,” he said.
“Lowered inflation mostly has to do with the ECQ and the people’s inability to spend. As we gradually relax the CQ rules and keep on improving in our battle against Covid-19 and assuming that people are still inclined to spend after, inflation should inch back up,” he said.
Meanwhile, PSA attributed the slow inflation rate of the region in March to the transport index which fell to negative 1.6 percent.
Other indices that have contributed to the decreased inflation rate are the Housing, Water, Electricity, Gas, and Other Fuels at 1.6 percent, Health at 4.7 percent, and Restaurant and Miscellaneous Goods and Services at 3.2 percent.
Meanwhile, PSA recorded an increase in annual indices in commodity groups such Alcoholic Beverages and Tobacco; Food and Non- Alcoholic Beverages; and Furnishing, Household Equipment and Routine Maintenance of the House at 15.3 percent, 1.8 percent, and 4.9 percent, respectively.
Annual growth rate is said to be slower in food items such as Vegetable at -4.7 percent, Fruits at 13.2 percent, and Food Products, N.E.C. at 8.6 percent but higher annual increments were reported in the indices of Fish at 13.9 percent, Rice at -7.0 percent, and Bread and Cereals at -5.0 percent.
For the inflation in the provinces, Davao del Norte and Davao de Oro rose to 3.7 and 2.8 percent, respectively while Davao del Sur significantly dropped to 1.9 percent in March from 2.5 percent in February.
Among the provinces, Davao Oriental posted the lowest inflation in March with 0.7 percent, a decline from 1.0 percent in the previous month.