The country’s headline inflation rate continued to slow down, but the central bank warned of upside price pressures in the near term due to the possibility of a stronger and prolonged El Niño episode as well as the continued increase in global crude oil prices.
The Philippine Statistics Authority (PSA) reported on Friday, April 5, that the headline inflation rate further decelerated to 3.3% in March 2019 from 3.8% in February and 4.4% in January.
The PSA said this was primarily due to the slower annual increase in prices of the heavily weighted food and non-alcoholic beverages.
The indices of the following commodity groups posted lower annual rates:
Food and non-alcoholic beverages, 3.4%;
Alcoholic beverages and tobacco, 10.8%;
Housing, water, electricity, gas, and other fuels; and furnishing, household equipment and routine maintenance of the house, both at 3.4%;
Communication, 0.3%; and
Restaurant and miscellaneous goods and services, 3.7%.
The rest of the commodity groups either had faster annual mark-ups or retained their previous month’s annual rates.
Excluding selected food and energy items, core inflation slid further to 3.5 percent in March 2019 from 3.9% in February.
Meanwhile, the Bangko Sentral ng Pilipinas (BSP) said the potential slowdown in economic activity due to the budget impasse and the weak global economy present downside risks to inflation.
The country’s economic planners warned in a statement on March 13, 2019 that the economy could slow down if the government continues to operate on a re-enacted budget.
Members of the Development Budget Coordination Committee (DBCC) revised macro-economic assumptions, projecting a 6% to 7% gross domestic product (GDP) growth for 2019. This is lower than the previous target range of 7% to 8%.
The committee also estimated that economic growth would be lower by 0.7 to 0.9 percentage points if the budget is re-enacted until April 2019, which means a GDP growth of at most 6.1% to 6.3%.
If the budget is reenacted until August, growth would be lower by 1.4 to 1.9 percentage points. With a full-year re-enacted budget, growth would be slashed by 2.1 to 2.8 percentage points. (Ventures Cebu)