High prices of certain commodities fueled by an uptick in inflation would likely prevail until 2024, according to the National Economic and Development Authority (Neda).
At news briefing in New York City aired on the social media platforms of government agencies, Socioeconomic Planning Secretary Arsenio M. Balisacan said inflation is one of the uncertainties faced by the country in terms of attaining upper middle-income country (UMIC) status by 2024.
“We do face such uncertainty but we do also believe that the goal to achieve an upper middle-income status is still doable, as can be elaborated by [Bangko Sentral ng Pilipinas]Governor [Felipe] Medalla. The inflation, while it is a bit elevated, will be under control by 2024,” Balisacan said.
In a separate in-person briefing in Manila on Friday, Neda Undersecretary for Policy and Planning Rosemarie G. Edillon, for her part, said Balisacan was merely referring to the targets of the government and that efforts are underway to combat inflation.
Edillon said while the 2024 target is for inflation to average 2 to 4 percent, the inflation for 2023 is already seen to come closer to given expectations that external price pressures such as oil prices are on the decline.
Based on the Department of Energy’s (DOE) oil monitoring report, Dubai crude prices increased by almost $1 per barrel from September 12 to 16 this year. However, as of September 20, 2022, domestic oil companies implemented a per liter decrease in diesel by P4.15 and P4.45 for kerosene, while gasoline prices were not adjusted.
Edillon added efforts to push for food security would be prioritized by the government in the short- and medium-term. This is also included in the eight-point socioeconomic agenda of the current administration and the upcoming Philippine Development Plan (PDP).
“It’s really about addressing, number one, food security, especially for the most vulnerable. We also want to address this from the supply side. That is the reason why this year, there is a fuel subsidy for our farmers and for the transport sector as well,” Edillon explained. “It will be included in their input cost and we hope that will also translate to better prices for our consumers.”
Edillon said the same strategies are also expected to work in terms of the depreciation of the peso. On Thursday, the peso again recorded an all-time low at P58.49 to a dollar.
It can be noted that the Philippines remains a net food importer. This means, it imports more food items in order to feed its 110 million population.
But Edillon assured that the depreciation of the peso is “very temporary” since it was merely caused by the monetary policy of the US Federal Reserve, the latest of which was to raise interest rates by 75 basis points (bps).
However, reports indicated that a forecast released by the US Federal Reserve showed that inflation would not return to its 2 percent target until 2025. The Fed said it expects to continue raising interest rates to cool inflation.
To date, the latest inflation print in the US is at 8.3 percent in August, a tad slower than the 8.5 percent reported in July. On Thursday, the interest rates raised again by another 75 bps.
The Bangko Sentral ng Pilipinas (BSP) also raised interest rates by 50 bps placing interest rates at 4.25 percent. The interest rates on the overnight deposit and lending facilities were raised to 3.75 percent and 4.75 percent, respectively.
“In the next couple of months, we expect what we call monetary policy normalization,” Neda Assistant Secretary Sarah Lynne S. Daway-Ducanes said in the briefing. “As things are starting to normalize, economies are starting to open up again, [they are changing] their perspective on key policy rates. And that of course will attract investments. In the next couple of months, we expect the peso to stabilize.”
Part of what will allow the peso to appreciate in the coming months is the inflow of remittances. Edillon said the forthcoming holiday season is expected to bring in more dollars from overseas Filipino workers (OFWs) as gifts to their families back home.
This is expected to stem further depreciation of the peso, even in the face of a strong dollar. Given this, Edillon hopes that OFWs families will be wise in the use of their remittances, careful to spend it on essentials and other items that are not affected by rising inflation.
This, Edillon said, would help OFW families maximize their foreign exchange gains brought by the peso depreciation. She noted that not all commodities have seen an increase in prices so OFW families still had some room to adjust their expenses.
“If you look at the recent inflation trend, it still [has something] to do with the transport and not all [commodities are affected]. So it’s really about consuming more of the goods that are not very, very sensitive to these inflationary trends. We’re hoping that the rate of the depreciation will be more than enough to [tide them over],” Edillon said.
On Friday, Neda gathered government planning officers 2022 in a culminating event of a series of consultative forums for the PDP 2023-2028.
Launched this September with the theme “ISAPLANO: Bagong Philippine Development Plan Para sa Patuloy na Pagsulong,” the PDP forum aims to solicit views and insights from various sectors in preparation for the formulation of the upcoming PDP 2023-2028.
Among those who participated were officials of Provincial Planning and Development Offices, City Planning and Development Offices, and Regional Development Councils from across the country. Planning officers from the government’s Executive and Legislative branches also joined and shared their insights on the upcoming PDP.
“Discussions and consultations such as these are important avenues for promoting greater engagement, encouraging participation, and obtaining support as we seek to be as inclusive as possible in planning our journey toward our collective long-term vision amid all the economic challenges we face today. For a nation of over 110 million people, a unified and cohesive development plan enables all of us in the public sector to work collaboratively so that our efforts are concerted and geared towards common goals,” Balisacan said.
The country’s chief economist also underscored the importance of enhancing government processes and public services for development.
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