April 5, 2019

Headline inflation  further eased in March 2019, but government is still on the lookout for risks that can cause price pressures in the coming months, the National Economic and Development Authority said.

The Philippine Statistics Authority reported that inflation decelerated to 3.3 percent in March 2019, extending a downtrend that began in November last year.

The March inflation number is below the median market forecast of 3.5 percent, and well within the Bangko Sentral ng Pilipinas’ (BSP) forecast range of 3.1 to 3.9 percent for the month.

The latest result brought the year-to-date inflation to 3.8 percent, which is within the BSP’s inflation target for 2019.

“Despite the further easing of headline inflation in March 2019, the government will remain vigilant for risks such as the El Niño phenomenon, higher rates of electricity and water, and the volatility in global oil prices,” NEDA Officer-in-Charge (OIC) Secretary Adoracion M. Navarro said.

Food inflation significantly slowed to 3.1 percent in March, as softer price adjustments in fish, rice, vegetables, and other food items were recorded.

“The decline in fish prices can be partly attributed to the end of the three-month closed fishing season in some parts of the Visayas,” Navarro said.

Expectations of an increase in the rice supply following the enactment of the Rice Tariffication Law, on the other hand, led to lower retail prices of rice.

“The recent enactment of the Rice Tariffication Law, which liberalizes the importation of rice, now leads to the decline in the prices of rice in the domestic market,” she said.

However, the unfolding El Niño phenomenon poses upside inflation risks.

Based on the latest report of the Philippine Atmospheric, Geophysical, & Astronomical Services Administration (PAGASA), mild to moderate El Niño conditions are estimated to occur from March to October 2019 and will weaken in the last three months of the year.

“A prolonged dry spell may affect the prices of food and utilities in the short term,” Navarro added.

To ensure there are enough interventions that mitigate the adverse effects of El Niño, the inter-agency El Niño Task Force (ENTF), led by NEDA, will be reactivated as recommended by the National Disaster Risk Reduction and Management Council.

The ENTF will revisit the 2015 Roadmap for Addressing the Impacts of El Niño (RAIN), which aims to lessen the impact of El Niño on food and energy security, health, and safety. It will be expanded to include water security among areas of concern.

Navarro is OIC of NEDA while Socioeconomic Planning Secretary Ernesto M. Pernia is on official travel abroad.