THE National Economic and Development Authority (Neda) warned Tuesday that inflation rate could go up in the coming months due to the possible higher transportation fares and electricity rates and impact of the proposed tax reform measures.
This as inflation rate hit 3.4 percent in April, similar to previous month, but higher than the 1.1 percent during the same period last year, Neda said.
The April inflation rate was slightly below the median market expectation of 3.5 percent and remains within the government's target of 2.0 to 4.0 percent for 2017.
"Possible increases in transportation fares and electricity rates in the coming months could also exert upward pressure on prices, along with the transitory impact of the proposed tax reform program,” said Neda officer-in-charge and Undersecretary for Investment Programming Rolando Tungpalan.
But he said the April inflation was a respite from the upward inflation trend for the first three months of the year, which averaged at 3.2 percent.
"Nevertheless, volatilities in oil prices and erratic exchange rates can still manifest into higher domestic prices for both food and non-food commodities," Tungpalan said.
Prices of staples such as rice, meat, and fish remained high due to supply constraints, Neda noted. Data from the Philippine Statistics Authority (PSA) showed the country’s declining inventory of commercial and NFA rice.
Meanwhile, Tungpalan said normal rainfall pattern and neutral weather conditions expected from March to August bode well for the crops sector.
"With the potential recurrence of El Nino, the government should start taking precautionary actions to mitigate the damaging effects of droughts and dry spells. These include production support, distribution of seeds, and timely importation," said Tungpalan.
He also urged the government to prioritize discussions on rice tariffication, in order to avoid creating policy uncertainties. “Additional interventions should also be taken to address those who will be negatively affected by the expected increase of rice imports,” added Tungpalan.
Tungpalan is OIC of Neda while Socioeconomic Planning Secretary Ernesto Pernia is on official travel in Yokohama, Japan. (SDR/SunStar Philippines)