An economist of ING Bank Manila said the inflation rate is expected to settle within the official target range of 2 percent to 4 percent this year if the government will ensure stable food supply.
ING Bank Manila senior economist Nicholas Mapa said the 2018 inflation―which averaged 5.2 percent―appeared to have been driven in large part by the 9.7-percent food inflation seen in September last year.
“Given that the food basket is roughly 34 percent of headline inflation, we can expect that for as long as we keep our supply chains for food stable, the Philippines will have a fighting chance to keep inflation in check,” Mapa said.
“For as long as the national government can ensure stable food supply by way of timely importation and improved crop production, we’ll have a fighting chance to keep cost-push inflation in check,” he said.
Inflation peaked at 6.7 percent in September and October but eased to 6 percent in November and 5.1 percent in December as the immediate measures implemented by the government to curb rising prices took effect.
Inflation further eased to 4.4 percent in January 2019, 3.8 percent in February and to a 15-month low of 3.3 percent in March, bringing the first-quarter average to 3.8 percent, within the target range.
The policy-making Monetary Board of the Bangko Sentral ng Pilipinas kept the benchmark interest rate steady at 4.75 percent on March 21, amid the slowdown in the inflation rate.
The board chaired by BSP Governor Benjamin Diokno said inflation pressures eased further, reflecting mainly the decline in food prices amid improved supply conditions.
The board reduced the inflation target this year to 3 percent from the previous estimate of 3.1 percent. Its forecast for 2020 was kept at 3 percent.
The BSP has raised a total of 175 basis points in the benchmark interest rate in 2018 in a bid to curb the rising inflation.