THE ECONOMIC situation is normalizing, thanks to the stabilizing inflation and foreign exchange rates in time for the Christmas season.
The Philippine Statistics Authority reported that the annual headline inflation rate, or the movement in consumer prices, eased to 6 percent in November from a nine-year high of 6.7 percent in October. Slower increases in the costs of prime commodities contributed to the lower inflation rate.
Factors such as the sharp decline in petroleum prices, normalization of rice supply and the peso appreciation helped bring down inflation, according to the Bangko Sentral ng Pilipinas.
BSP Governor Nestor Espenilla Jr. described the November inflation as “very encouraging,” especially as the month-on-month inflation actually declined 0.3 percent in November. The BSP now expects the inflation rate to return to the target range of 2 percent to 4 percent, as measures such as the interest rate hikes and allowing more rice imports into the local market begin to take effect.
Economic managers said the slower inflation in November reflected the efficacy of anti-inflationary measures taken by the government.
I believe that such government measures, coupled with the strengthening peso and softening petroleum prices in the world market, would further tame the inflation rate in December and the first quarter of 2019.
Data show that the Dubai crude oil prices fell 14 percent to $68 per barrel in November from $79 barrel in October. The price of Dubai oil is predicted to drop below $60 a barrel in 2019.
The Philippine peso also stabilized at 52 per US dollar in November, a strong improvement from a range of 54 per greenback in September.
On the policy side, the passage of the Rice Tariffication bill in Congress is expected to further bring down the price of rice, which represents the biggest item in the consumer price index basket. Economic managers also believe the slowdown in inflation rate would continue in the near term.
With the government and the BSP focusing their attention on managing prices, our people can be assured that 2019 will be better than this year.
The private sector also did its part by working with the Department of Trade and Industry in following the suggested retail prices, or SRPs, of basic necessities and prime commodities. In fact, several brands of bread and milk decided to reduce their prices as part of the manufacturers’ social contribution this holiday season, according to Trade Secretary Ramon Lopez.
The DTI vowed to continuously watch the prices of goods and their raw materials, as well as the developments in the world market and domestic economy, to ensure that prices are reasonable. The agency expects further reduction in the SRPs in the first quarter of 2019.
Businesses now see more signs of relief because of the decelerating inflation. Remember that inflation is linked to household spending which is the biggest component of the Philippine economy. The gross domestic product grew 6.1 percent in the third quarter, the slowest in nearly three years, as inflation hit a nine-year high of 6.7 percent in September and affected consumers’ sentiments.
A high inflation rate will directly affect the poorest Filipinos, which could also exacerbate poverty and unemployment in the country. This is why it is important for the government and the BSP not to lose sight of price management while allowing the market to become dynamic.
A more optimistic outlook on inflation and the economy in general will eventually translate into better sales of commodities, services, properties and automobiles.
I find the slower November inflation rate comforting because it is providing our Filipino consumers with more purchasing power this Christmas season.
Merry Christmas!
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This piece first came out in Business Mirror on Dec. 18, 2018 under the column “The Entrepreneur.” For comments/feedback e-mail to: mbv.secretariat@gmail.com or visitwww.mannyvillar.com.ph./PN
