The country’s headline inflation rate slowed down further to 3.8% in February 2019, moving back within the government’s target band of 2% to 4% for the first time in exactly one year.
Socioeconomic Planning Secretary Ernesto M. Pernia said this “bodes well for overall manufacturing growth” since the continued decline in price increases will improve consumer outlook and prop up domestic demand.
On the same day that the Philippine Statistics Authority (PSA) released the February 2019 report, the agency also released factory output figures for 2019.
According to the PSA’s Monthly Integrated Survey of Selected Industries (MISSI), the Volume of Production Index (VoPI) went down by 4.1% in January compared to the revised December 2018 output of 11.9% decline and against the 10.8% growth in January 2018.
It was the second consecutive month of decline in factory output, although the January figure was an improvement from the December results.
The Value of Production Index (VaPI) for January 2019, meanwhile, also declined by 0.7%, PSA said.
In a statement, Pernia said the easing of inflationary pressures coupled with the implementation of rice tariffication effective March 5, 2019 are expected to help the manufacturing sector recover.
“The decline in prices of rice and agricultural commodities brought about by the appreciation of peso and the increase in supply of rice imports will improve consumer outlook and prop-up domestic demand,” Pernia said.
He added that the recent passage of the Rice Industry Modernization Law, which scrapped quantitative restrictions and imposed tariffs on rice imports, is also expected to lower the retail prices of rice, and thereby further stabilize inflation.
“This may result in lowering the cost of inputs for the manufacturing sector and provide opportunities for production expansion,” he said.
The PSA reported that inflation decelerated to 3.8% in February 2019, matching its yearago level. Inflation started to climb in March 2018, when it moved out of the government’s target range to settle at 4.3%.
Prices of goods and services continued to move faster until inflation peaked at 6.7% in September and October 2018 before slowing down to 6% in November and further to 5.1% in December 2018. Inflation continued to ease, settling at 4.4% in January and then at 3.8% in February 2019.
The PSA traced the continued slowdown in inflation to the slower 4.7% annual increase in the heavily-weighted food and non-alcoholic beverages index.
Price increases were also slower in other commodity groups, except communication and education. Communication remained at 0.4% while education continue to post a negative rate of 3.8%.
Core inflation, which does not include selected food and energy items, also eased further to 3.9% in February 2019 compared to 4.4% in January.
“With these developments, we are optimistic that the downward path of inflation will continue for the rest of the year. This will be backed by the recent enactment of the Rice Industry Modernization Act (RA 11203), which is expected to bring down rice prices and cut inflation by 0.5 to 0.7 percentage point this year and 0.3 to 0.4 percentage point next year,” the economic team said in a joint statement. Aside from Pernia, the team is also composed of the heads of the Budget and Finance departments.
Rice inflation significantly moderated to 2.9 percent from 4.7 percent in January 2019 on the back of stable rice supply. Based on the monitoring of the Philippine Statistics Authority, prevailing retail prices of regular-milled rice has now declined by around P5 per kilo since it peaked in September 2018, they added. (Ventures Cebu)