Non-monetary measures needed to bring down inflation: BSP

“The BSP reaffirms its strong commitment and readiness to take all necessary policy actions to address the threat of high inflation and deliver on its primary mandate of price stability,” it added. (File Photo: Bangko Sentral ng Pilipinas/Facebook)

MANILA — Non-monetary measures need to be put in place to help slow the rise of inflation and bring it back to government’s two to four percent target in 2019.

This was stressed by the Bangko Sentral ng Pilipinas (BSP) Friday amid another increase in the rate of price increases last September to 6.7 percent from 6.4 percent last August on account of the 9.7 percent uptick of the heavily-weighted food and and non-alcoholic beverages index.

In a statement, the central bank said that “latest average baseline inflation forecasts indicate that inflation will settle above the 3.0 percent ± 1.0 percentage point target range for 2018-2019.”

“Nevertheless, the implementation of non-monetary measures, particularly the approval of rice tarrification along with additional importation of rice and other food items, could lead to an earlier return of inflation to within the target range in 2019,” it said.

“Likewise, inflation is seen to approach the midpoint of the target range in 2020,” it said.

“The BSP reaffirms its strong commitment and readiness to take all necessary policy actions to address the threat of high inflation and deliver on its primary mandate of price stability,” it added.

The central bank’s policy-making Monetary Board (MB) has increased the BSP’s key policy rates by 150 basis points to date to help address the elevated inflation rate.

However, monetary officials have stressed that since the rise of inflation is due to supply-side factors, which cannot be addressed by monetary policy alone, there is a need for non-monetary measures.

Thus, the issuance by Malacañang of several issuances to address the lack of rice supply, among others issues.

Administrative Order (AO) No. 13 was issued to remove non-tariff barriers and streamline administrative procedures on the importation of basic agricultural commodities.

Memorandum Order (MO) No. 26 directs the Department of Trade and Industry (DTI) and the Department of Agriculture (DA) to implement measures that will reduce the gap between farm-gate and retail prices of agricultural products.

Also, MO No. 27 directs the DA, the Department of Interior and Local Government (DILG), and the Metropolitan Manila Development Authority (MMDA) to ensure efficient and seamless delivery of imported agricultural and fishery products from ports to markets.

In turn, MO No. 28 was issued ordering the National Food Authority (NFA) to immediately release about 230,000 metric tons (MT) of rice in its warehouses nationwide and the immediate distribution of the 100,000 MT of rice that have been contracted and was expected to be delivered by end-September.

Economic managers have also called on lawmakers to approve the proposed rice tarrification bill to ensure higher rice supply in the country, thus, lowering prices.

In a joint statement issued Friday, they assured the public that they “are working swiftly to temper the rise in the prices of goods and offer relief to those most affected.”

“We remain committed to our goal of ensuring price stability, along with our overarching aim of translating sustained broad-based economic growth to comfortable lives for everyone,” it said.

The statement also noted that although domestic inflation rose anew last September, inflation of non-food index registered slower rate of four percent from 4.1 percent in the previous month.

It also cited that “inflation in the National Capital Region (NCR) also showed signs of easing, slowing down to 6.3 percent in September 2018 from the 7.0 percent in August 2018.”

“These clear signs of easing boost our confidence that inflation will taper off by year-end and go back to our target range by early next year,” it said, but added that “we must couple this optimism with quick and focused actions in order to sustain gains made so far in keeping inflation in check.”