The National Economic and Development Authority (NEDA) said it is crucial to ease the inflation rates, particularly the rice prices, in the coming months to achieve the government's growth target.
NEDA Secretary Arsenio M. Balisacan told reporters that the goal of keeping the inflation within the 2.0 percent to 4.0 percent target band should be viable to achieve the government’s growth target of 6.0 percent to 7.0 percent.
“What we are watching is the two to four target for a year. Because inflation, you know, could go up, go down. But, you know, what you want to is to keep that within the band so that there will be not much instability in prices,” he said.
The NEDA chief also stated that the possibility of easing rice prices in the coming months will be a “plus factor” as the El Niño phenomenon is waning in June.
“We hope, second half of this year, we expect the pressure from food prices to diminish. Because, you know, a big part of that food inflation was imported in the sense that food prices, particularly for staple, have been rising in the world market,” he said.
However, he said that unforeseen factors should also be taken into consideration such as the conflict in Middle East that could impact energy prices.
“If the energy prices are also, you know, will continue to rise, then it could affect logistics, distribution, and that could impact on food prices too. But, you know, we hope that that will not be serious.
Balisacan said that the inflation rate as compared to last year, which reached high levels of 8.0 percent, could be an advantage to reaching the growth target despite the signals of delays in policy rate cuts that could further impact domestic consumption,
“That's all already given that the interest rates that were a result of the policy actions last year are expected to be felt this year. But then, as inflation has come down from their highs, it's high in early last year. So, the public would be expecting that a lower interest rate down the road. Not too soon because of the volatility of the external environment, I believe,” he said.
The inflation readout has been swelling for two months, climbing to 3.7 percent in March from 3.4 percent in February.
International observers Asian Development Bank, World Bank, and International Monetary Fund positioned the country to grow to 6 percent, 5.8 percent, and 6.2 percent, respectively, still near or within the government’s target of 6 to 7 percent for 2024.