High inflation puts goal to cut poverty at risk

High inflation puts at risk the government’s target to slash poverty incidence to 14 percent of the population by the end of the Duterte administration, the state planning agency National Economic and Development Authority (Neda) said.

In a recent presentation, Neda Assistant Secretary Carlos Abad Santos said there was a “need to keep inflation within target to lift six million Filipinos out of poverty.”

“If growth targets are met, and if these benefit the poor, and if population growth is kept to 1.6 percent per year, inflation at 3 percent and poverty line inflation at 5 percent per annum, the poverty rate target of 14 percent in 2022 will be met,” Abad Santos said.

The poverty incidence rate stood at 21.6 percent in 2015, and the government aims to cut it by over 7 percentage points through its 10-point socioeconomic agenda.

In its Socioeconomic Report 2017 released in March, Neda said the goal to reduce poverty incidence “may be at risk in 2018, if inflationary pressures are not addressed effectively and immediately.”

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 during the first four months, already breaching the government’s target range of 2-4 percent.

Last month, the Cabinet-level Development Budget Coordination Committee decided to keep the medium-term inflation goal, while also retaining the 7-8 percent gross domestic product growth target for 2018 to 2022.

Following the policy-setting Monetary Board’s meeting last week, the Bangko Sentral ng Pilipinas raised its inflation forecast for 2018 to 4.6 percent from 3.9 percent previously, while also jacking up its 2019 projection to 3.4 percent from 3 percent.