Inflation uptick not a cause for concern, says ADB

MANILA, Philippines — Multilateral lender Asian Development Bank (ADB) said the faster increase in consumer prices should not be a cause for concern in the Philippines as monetary authorities are doing everything to curb rising inflationary pressures.

ADB director general Ramesh Subramaniam said the recent inflation uptick should not be a cause for concern because the Bangko Sentral ng Pilipinas (BSP) has been closely monitoring the inflation situation.

Inflation averaged 4.1 percent in the first four months, exceeding the two to four percent target set by the BSP. The consumer price index leapt to a fresh five-year high of 4.5 percent in April from 4.3 percent in March due to rising oil prices and the impact of the implementation of Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

Subramaniam said the current rate remains within range if compared with other economies in the region.

“Inflation is a bit higher than what it used to be in the past, but we are confident that the inflation, price stability is a key objective that the central bank pursues. And if you compare across the region, a few countries do have inflation in this range. We don’t think that will be a concern,” he said.

Last May 10, the Monetary Board raised rates for the first time in more than three years to arrest potential second-round effects by tempering the buildup in inflation expectations.

It also raised its inflation forecast to 4.6 instead of 3.9 percent this year and to 3.4 instead of three percent next year.

The policy rate setting body also said it stands ready to undertake further policy action as necessary to ensure the achievement of its price and financial stability objectives.

Meanwhile, ADB is confident the Philippines would meet its target of reducing poverty incidence as the government’s massive infrastructure buildup and its social protection programs are aimed at addressing inequalities across the country.

 “In the Philippines as well as elsewhere in the region, we are doing a lot of inclusive growth projects. In fact, if you look at poverty reduction or in poverty incidence, significant gains have been made across the region, particularly in the Philippines. We believe the country is well positioned to bring down poverty incidence to below 14 percent by 2022,” he said.

He said President Duterte has made it his goal to reduce poverty incidence to only 14 percent by 2022 and transform the country into a high middle-income economy by that time through aggressive spending on infrastructure and human capital development.

He said the government’s infrastructure spending grew faster by 34 percent in the first quarter from 12 percent in the same quarter in 2017 primarily due to the Duterte administration’s Build Build Build program.