MANILA, Philippines — The lower inflation rate posted in September augurs well for the economy, which needs to expand faster in the second half in order to reach the 6.5-7.5 percent growth target for 2014, according to the Department of Finance’s chief economist.
“The economy successfully reversed inflationary expectations through a decisive reduction in food inflation in September. This favorable development will enable the BSP [Bangko Sentral ng Pilipinas] to avoid further tightening of monetary policy and will enable the attainment of a higher GDP [gross domestic product] growth rate in the second semester,” Finance Undersecretary Gil S. Beltran said in a statement on Thursday.
Inflation improved to 4.4 percent last month from 4.9 percent in August, which the National Economic and Development Authority (NEDA) attributed to moderate hikes in food prices, lower electricity charges, as well as the rollback in global and domestic gasoline prices.
Bangko Sentral ng Pilipinas. INQUIRER.net FILE PHOTO
The first half GDP slowed to 6 percent from 7.8 percent in the first semester of 2013, mainly as the daytime truck ban implemented in the city of Manila from February to mid-September slowed trade. As the truck ban stalled the movement of goods in and out of the country’s biggest and busiest port, the prices of a number of basic products went up.
According to Beltran, “the government should implement longer-term solutions to the port and transport congestion” to boost the second half GDP.
Socio-economic Planning Secretary and NEDA director-general Arsenio M. Balisacan had said that the economy should expand by at least 6.9-7 percent in the second half to achieve the lower end of the 2014 goal.
As for food prices, Beltran urged the Departments of Agriculture as well as Trade and Industry to “continue streamlining the delivery of products to the markets and should act more decisively if there are factors that constrain the process.”
In September, food price inflation slowed to 7.4 percent from 8.3 percent in August as increases in prices of bread and cereals, rice, as well as vegetables eased. The prices of corn, fish, fruits, chocolate and sugar, as well as egg, cheese, and milk, however, rose at a faster pace last month.
By the end of September, the headline inflation rate stood at 4.4 percent—still within the Development Budget Coordination Committee’s full-year target of 3-5 percent.
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