Inflation in general ‘not a major crisis’

Economic managers sought to assuage concerns over inflation on Friday, claiming “slightly elevated” consumer price growth was not a “major crisis” and that the government was working to address the matter.

“It may be a serious problem for some people, but for the nation, in general, it’s not a major crisis,” Finance Secretary Carlos Dominguez 3rd told reporters.

Budget Secretary Benjamin Diokno, meanwhile, said it was “irresponsible” to describe the latest inflation reading as “runaway” or incapable of being put under control by the Bangko Sentral ng Pilipinas (BSP).

“It is building a lot of panic in the minds of people. Our central monetary authority is very capable and we have to have a lot of tools,” he said.

“The best term for inflation right now is ‘slightly elevated’,” Diokno continued.

Inflation hit a fresh nine-year high of 6.4 percent in August, exceeding the Finance department and the BSP’s 5.9-percent forecast and stoking complaints that authorities were doing little to address the mounting cost of food—a major component of the consumer price index.

The government’s 2.0-4.0 percent inflation target for the year has been exceeded since March and blame has been laid on factors such as tax increases implemented at the start of the year, costlier rice due to supply issues, and global crude price hikes.

Dominguez and Diokno claimed that measures under a proposed executive order (EO)—soon to be signed by President Rodrigo Duterte—would bring inflation back to the government’s 2-4 percent target.

“The measures are non-monetary tools that will temper inflation,” Dominguez said.

Diokno added that “we feel inflation will normalize in fourth quarter and then will be back to the 2-4 percent target by next year.”

He also emphasized that the proposed EO could pull down food inflation by at least 2.4 percent. Food items contributed 2.9 percentage points to August’s 6.4 percent result.

Measures included in the proposed EO, according to the National Economic and Development Authority (NEDA), are the removal of “administrative and non-tariff barriers” on fish, rice, sugar, meat and vegetable imports.

Immediate measures include making rice available in the market through the release of stocks from National Food Authority warehouses, importation and the distribution of projected harvests; monitoring of rice transfers from ports to warehouses and retail outlets; and the speedy passage of the rice tariffication bill.

Availability of fish and chicken will be increased by allowing imports to be distributed quickly and by setting up public markets with cold storage facilities where producers can sell directly to end consumers, the NEDA added.

The measures also include policy measures that include the review and possible amendment of the Fisheries Code and other policies governing the sector, and legislation for the tariffication of sugar, fish, meat and vegetables.

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