The Marcos administration's economic managers expect inflation to settle within the government's target of between two and four percent this year. National Economic and Development Authority (NEDA) Undersecretary Rosemarie Edillon is confident that commodity prices will stabilize.
"If you would recall, our target is between 2 to 4 percent average for the year, and yes, we are confident that we can hit that target," Edillon said.
Inflation fell to a four-year low of 1.9% in September this year, bringing the year-to-date inflation figure to 3.4%, which is well within the government's target. Edillon said President Ferdinand R. Marcos Jr.'s creation of the Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO) helped ease inflation.
Under Marcos' Executive Order (EO) 28, issued in May last year, the IAC-IMO is tasked with monitoring the main drivers of rising prices of basic goods, particularly food and energy, and their proximate sources and causes.
"We saw that this kind of mechanism worked; we could anticipate developments, and immediately, we had a direct line to the President. We always have regular meetings, and then we have a list of recommendations for what should be done and prioritized to lower inflation," she said.
Edillon said the easing inflation also contributed to a hike in employment. The latest data from the Philippine Statistics Authority showed that the country's employment rate rose to 96% in August this year from 95.6% last year, while the unemployment rate fell to 4.0% from 4.4%.
Edillon said the recovery in the tourism industry and the easing inflation helped create more jobs. "Then, other sectors like wholesale and retail trade activities also helped grow employment. We think that inflation also helped. Because of the easing inflation, consumers were able to spend more. Of course, for example, when demand increases, there is also an increase in employment," said Edillon.
**Policy easing**
Meanwhile, an economist believed further easing inflation would allow the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) to ease policy rates during next week's meeting. Rizal Commercial Banking Corporation chief economist Michael Ricafort said the BSP will likely further cut key interest rates by at least 25 basis points on Oct. 16.
Ricafort said that September's 1.9% inflation rate, better than market estimates, can "justify further monetary easing or even more aggressive local policy rate cut/s."
"For the coming months, inflation can sustain at 2% levels for the rest of 2024, or well within the BSP inflation target range of 2% to 4% that could justify further BSP rate cuts that would match any future Fed rate cuts from 2024 to 2026," he said.
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