Inflation inched up to 1.1 percent in March 2016 from 0.9 percent in February due to slight increases in food and oil prices, according to the National Economic and Development Authority (NEDA).

Inflation in food items went up slightly to 1.6 percent in March 2016 from 1.5 percent in the previous month. This is due to increases in the price of meat (1.2% from 0.9%), fish (2.8% from 2.3%), milk, cheese, and eggs (1.2% from 1.1%).

On the other hand, Socioeconomic Planning Secretary Emmanuel F. Esguerra noted that despite the El Niño phenomenon, rice prices remain lower than in the previous year (-1.7% in March from -2.0% in February) and have been declining consistently since October 2015. Likewise, the price of vegetables, while remaining elevated since November 2015, has trended down after peaking in January 2016, declining by 2.9 percent in March 2016 from the previous month, for a total decline of 7.8 percent since the beginning of the year.

“We have been closely monitoring price movements and looking at factors that influence commodity prices, especially food consumed by the poor,” said Esguerra, who is also NEDA Director-General. “Aware of El Niño, government has put in place a program to mitigate the impact of drought. We need to ensure adequate supply of food and provide assistance to affected farmers,” he said.

Meanwhile, an increase in domestic oil prices was recorded particularly for gasoline by 5.03 percent, liquefied petroleum gas by 0.58 percent, diesel by 8.6 percent and kerosene by 7.06 percent. According to NEDA, these increases were the result of cutbacks in production and exploration of international energy firms due to the continued soft oil prices.

“Outlook for oil prices in the medium term remain modest given a backdrop of strong world crude oil supply growth and weak global demand. Overall, the continuing environment of low international oil prices remains a positive development for the country considering that we are a net importer of oil,” said Esguerra.

The March 2016 inflation is slower than the 2.4 percent recorded in March 2015 and is in line with market expectations and within the Bangko Sentral ng Pilipinas forecast of 0.6-1.4 percent for the period. The Development Budget Coordination Committee targets inflation at 2.0 to 4.0 percent for 2016.

“In the first three months of 2016, inflation remained relatively low and stable in line with expectations over the policy horizon, which is likely to support consumption growth,” said Esguerra.

Nonetheless, he said government needs to remain vigilant. “Although El Nino has entered its weakening stage, the risk of higher food prices remains given the onset of the summer season,” said Esguerra. “Thus, we must also monitor our rice supply and importation to avoid supply disruptions which could result in volatilities in the price of rice,” he added.
Esguerra said that the Roadmap for Addressing the Impact of El Niño (RAIN) needs to be accelerated and sustained, particularly in the areas that have declared a state of calamity. The RAIN aims to ensure food security by increasing the supply of food, keeping food prices stable, and implementing measures to protect farmers’ incomes.

While implementing RAIN, Esguerra added that government will need to prepare for La Niña, which, according to international weather forecast, may likely bring in higher-than-normal volume of rainfall in the Philippines in the latter half of the year.