January 4, 2019

We, the economic managers, welcome the news that the country’s inflation rate came to a seven-month low at 5.1 percent in December 2018 sharply down from November’s 6.0 percent. This signifies that the mitigating measures already in force are broadly effective.

Slower price increases in food and non-alcoholic beverages and transportation continued to soften inflation in December.

With this, full-year 2018 inflation averaged at 5.2 percent, which is higher than last year’s 2.9 percent inflation but within the adjusted inflation forecast of the Development Budget Coordination Committee.

The rate of price increases has remained manageable, giving the country adequate elbow room to sustain its economic growth and reach its development goals. Still, we understand that the faster inflation, particularly in the middle of 2018, had affected many Filipinos, most especially those in the disadvantaged sectors. For this very reason, the economic team took swift and decisive measures to tame inflation as directed by the President.

Inflation in Metro Manila decelerated for the fourth consecutive month to 4.8 percent in December 2018 from 5.6 percent in November. The rest of the regions felt slower inflation rates in December 2018 compared to the previous month.

Nonetheless, we continue to exert all efforts to bring inflation within the government’s target range of 2 to 4 percent, and ensure price stability all year round.

While we can say that the worst seems over given the signs of easing price pressures, we continue to be vigilant of possible risks.

For this year, with the expected signing into law of the Rice Tariffication Bill, rice prices are expected to decline by as much as PhP7.00 per kilo. We recognize, however, that this favorable effect can only be sustained if there are more players in the rice market, starting from production and financing to post-harvest and trading.

Ensuring sufficient supply of rice and other major agricultural products from local sources likewise remains crucial over the near term with the looming El Niño phenomenon in 2019. Short-maturing, high-yielding, and resilient varieties of crops should be utilized, alongside efficient water management systems. Over the medium to long-term, reassessing the vulnerability and suitability of farm areas should also be prioritized to bring forth adaptive farming activities.

The economic team will aggressively push for the full operationalization of the National Single Window.  At the same time, the government pledges to step up its anti-smuggling measures, aiming that only duly-taxed imports enter the country. We also need the Philippine Competition Commission to be vigilant in curbing anti-competitive behavior, particularly in the rice market. In the fisheries sector, the government is strengthening its crackdown against illegal fishing. Ten out of the 13 fishing grounds in the Philippines were reportedly overfished. This effort must be accompanied by sustainable coastal resource management to help increase fish production.

We also advise the Department of Agriculture to hasten the issuance of the Fisheries Administrative Order No. 259 to compensate for the limited supply as some parts in the Visayas are under closed fishing season.

For the past two months, the Philippines continues to benefit from the falling prices of international crude oil resulting in a series of oil price rollbacks. The Department of Energy, on its end, is closely monitoring domestic pump prices to ensure that the new excise tax on oil is not yet reflected in the prices at the start of the year, as old fuel inventories are not subjected to the tax increase.

We also ask concerned government agencies to fast-track the implementation of the mitigating measures scheduled this year under the Tax Reform for Acceleration and Inclusion Law, particularly the unconditional cash transfer and fuel vouchers.

These could fend off possible second-round effects, which may arise from further demand for wage and fare increases.

As we welcome 2019, we assure the general public that our dedication and commitment to our collective long-term vision of a good life for all remain undiminished.