Inflation steadies in December

MANILA, Philippines — The Philippines’ full-year inflation rate settled within the government’s target, with the consumer price index steadying in December, the country’s statistics agency reported Friday.

According to the Philippine Statistics Authority, headline inflation last month rose to 3.3 percent from a year ago — the same pace clocked in November and within the Bangko Sentral ng Pilipinas’ 2.9 percent to 3.6 percent target range.

Based on government data, December inflation was due to faster increases in food prices (corn, meat, fish, fruits, cereals) that was offset by lower non-food inflation (transport, housing, water, electricity, gas and other fuels).

The December figure brought the average for 2017 to 3.2 percent, which was well within the central bank’s 2 percent to 4 percent estimate.

Excluding selected food and energy items, core inflation moved up at a slower pace of 3.0 percent in December.

The BSP’s Monetary Board in their last rate setting meeting in December kept benchmark rates steady anew as inflation remains manageable.

In a statement, Socioeconomic Planning Secretary Ernesto Pernia said the government expects inflation over the near-term to remain stable despite potential price pressures by the tax reform law, weather patterns, and uncertainties in international oil markets.

To soften the inflationary effects of the tax reform program, Pernia said the government would prioritize amending 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,” Pernia explained.

“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.