Leaders of the country’s three most influential business groups have recognized inroads made by the government in easing price pressures.
Their sighs of relief came when the Bangko Sentral ng Pilipinas (BSP) reported that headline inflation decelerated further to 6.1 percent year-on-year in May from 6.6% in April.
Francis Chua, chair emeritus of the Philippine Chamber of Commerce and Industry (PCCI), said in an interview Friday that BSP’s policies have “evidently been effective in controlling the flow of money.”
“The May inflation rate, the lowest so far this year, can be attributed to the Monetary Board’s decision to raise key policy rates, and then finally keep them steady at 6.25 percent,” he said.
Chua, who founded the International Chamber of Commerce’s domestic chapter, also noted the Marcos administration’s efforts to bring down the prices of basic commodities by addressing supply deficiencies.
“So far, so good,” said Sergio Ortiz-Luis, Jr., president of the Employers Confederation of the Philippines, referring to the BSP’s monetary policy-making. “The BSP’s target of slowing inflation down to 4% or less later this year is looking more attainable,” he noted.
By a stroke of fortune, the declining price of petroleum in the international market also seems to be cooperating with domestic efforts to address inflation, he added.
Ortiz-Luis, however, cautioned economic policy-makers against giving in to the labor sector’s clamor for a legislated wage hike, which he said would be “highly inflationary and would benefit only a small percentage of workers in the formal sector.”
Meanwhile, Federation of Philippine Industries (FPI) chair Jesus Arranza, said they “give credit to the Office of the President for its efforts to put it (inflation surge) under control.” FPI represents local manufacturers.
Arranza explained that Malacañang’s initiatives encouraging the importation of certain goods to fill existing supply gaps helped alleviate inflationary pressures. He said there are signs that some retailers are slashing prices to recoup lost sales volume “because consumers could no longer afford their goods,” thus, relieving price pressures somewhat.
“Let’s hope this (declining inflation) will continue, and even improve,” he said.
In its report released earlier this week, BSP noted that aside from the softening prices of oil products, the “slower price increases of fish, meat, as well as milk, other dairy products and eggs,” also favored the Filipino consumer last month.
In March, when inflation was still at a high of 7.6% , the monetary authority projected average inflation in 2023 to settle at 6%. Recent developments have caused the BSP to reset its whole-year inflation target down to 5.5%.
The BSP report, however, cautioned that the “persistent constraints in the supply of key food items, the potential impact of El Niño on food and electricity prices, and the effects of possible further increases in transport fares and minimum wages may cause inflation to exceed the latest forecasts.”