Socioeconomic Planning Secretary Ernesto M. Pernia. INQUIRER file photo / JOAN BONDOC
The country’s chief economist on Thursday blamed high inflation for the below-target economic growth in the first quarter.
Socioeconomic Planning Secretary Ernesto M. Pernia told a press conference that had not for the faster rate of increase in prices of basic goods at the start of the year, the gross domestic product (GDP) would have grown within the 7-8 percent target range for 2018.
Pernia, who heads the state planning agency National Economic and Development Authority (Neda), said inflation was a “spoiler.”
Pernia said the first-quarter GDP growth would have reached the middle of the full-year goal had inflation not been higher.
Last week, the government reported that inflation rose 4.5 percent year-on-year in April, an over five-year high, mainly on the back of a jump in prices of “sin” products such as cigarettes and alcoholic drinks.
As such, the headline inflation rate based on 2012 prices averaged 4.1 percent in the first four months, already breaching the government’s target range of 2-4 percent.
The high inflation environment was partly blamed on the weak peso, higher global oil prices, as well as the rising domestic consumer prices due to the Tax Reform for Acceleration and Inclusion (TRAIN) Act.
Signed by President Rodrigo Duterte in December, Republic Act No. 10963 or the TRAIN Law since Jan. 1 this year jacked up or slapped new excise taxes on cigarettes, sugary drinks, oil products and vehicles, among other goods, to compensate for the restructured personal income tax regime that raised the tax-exempt cap to an annual salary of P250,000.
READ: Tax reform bill signed amid criticisms
On Thursday, the government reported that the Philippine economy grew 6.8 percent in the first quarter, below the government’s target range.
The gross domestic product expansion during the first three months was nonetheless faster than the 6.4 percent in the first quarter of last year and the adjusted 6.5 percent in the fourth quarter.
Last year, the economy expanded by 6.7 percent, a slower pace than the 6.9 percent in 2016, an election year. /jpv