The Department of Finance (DOF) has vowed to prioritize efforts aimed at curbing the elevated consumer prices that are impeding the country's economic growth and hindering the generation of additional government revenues.

In a briefing on Wednesday, Jan. 24, Finance Secretary Ralph G. Recto said that inflation is still a significant concern that requires close attention, emphasizing the importance of finding ways to reduce it.

“In the immediate term, inflation has to be tamed decisively and kept at bay,” Recto told reporters. "It is imperative that we find ways and means to reduce inflation.” 

“Ensuring that prices of goods remain stable and affordable is crucial to further grow the economy, consequently enabling us to boost revenue collection,” he added.

The government's target for the economy, as measured by the gross domestic product (GDP), is a growth of 6.5 percent to 7.5 percent this year, while also aiming to generate P4.3 trillion in revenues.

Last Monday, Recto assumed the role of the government's representative to the Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP).

Recto’s appointment is to the seven-member body is crucial as the BSP maintains its tight monetary policy stance in response to inflation concerns, despite a moderation in consumer price growth. 

The BSP has raised its key interest rate by 450 basis points since May 2022, bringing it to a near 17-year high of 6.5 percent to tame inflation.

In 2023, the average inflation rate remained at 6.0 percent, significantly exceeding the central bank's target range of two percent to four percent.

“The Philippine economy is still regaining momentum from the onslaught of the pandemic. External risks have escalated due to growing geopolitical tensions and trade restrictions, leading to disruptions in the global supply chain,” Recto said.

“This has caused high inflation rate, which is the most urgent concern for Filipinos,” the finance chief added.

Based on BSP's baseline forecast, inflation may still settle at the higher end of the central bank's two percent to four percent target this year.

Earlier, the National Economic and Development Authority (NEDA) estimated that over seven million Filipinos could have escaped poverty if inflation had remained within the government's target over the last two years.

NEDA Secretary Arsenio M. Balisacan said that the high inflation rate, which averaged 4.2 percent in 2021 and 6.6 percent in 2022 for the bottom 30 percent income households, has weakened the purchasing power of indigent Filipinos.

"Had the inflation rate for the bottom 30 percent been at four percent in 2021 and another four percent in 2022, the cumulative increase in poverty threshold would be around 8.2 percent instead of 14.2 percent,” Balisacan said.