Inflation manageable, says NEDA

The National Economic and Development Authority (NEDA) said commodity price changes remained “manageable,” even with the slight increase in last month’s inflation rate.

The National Statistics Office (NSO) has reported a 3-percent increase in the annual inflation rate for April 2012, slightly higher than the March 2012 figure of 2.6 percent. This brought the year-to-date inflation average to 3 percent, which is at the low end of the government’s target of 3 to 5 percent for the whole year.

Economists agreed that the inflation rate would not likely breach the government target as food price increases had been relatively tame.

Benjamin E. Diokno of the University of the Philippines School of Economics, for one, said via e-mail that policymakers should be more concerned with creating more decent jobs rather than targeting inflation.

“This is not to say that the inflation of 3 to 5 percent should not be a concern. For the jobless, even a mild increase in prices could be devastating. Put differently, mild inflation is a bit tolerable if one is gainfully employed,” Diokno said.

He also said the Bangko Sentral ng Pilipinas (BSP) might have to wait until the first-quarter economic numbers were all in before adjusting its present policy rates.

“If economic growth is lower than expected, monetary authorities might consider further cut in the BSP’s borrowing rate. This is to put pressure on banks to lend to entrepreneurs and firms to spur higher economic activity. The reduction in policy rates may also be used to discourage the inflow of ‘hot’ money which has resulted to the appreciation of the peso. While stock traders rejoice, exporters and OFWs [overseas Filipino workers] and their families suffer. The continuing appreciation of the peso has added to the miseries of exporters and OFW workers,” Diokno said.

Earlier, the NSO said the rise in the prices of food—including fish, dairy products, non-alcoholic beverages and selected fruits—contributed heavily to April 2012’s inflation.

Citing a report from the Bureau of Agricultural Statistics, Economic Planning Secretary and Neda Director General Cayetano W. Paderanga Jr. said that the rate of increase of the retail price of bangus in Metro Manila, for instance, went up to 28.3 percent in April 2012 from 23 percent in the previous month.