THE National Economic and Development Authority (Neda) said the country can expect the prevailing low inflation regime to continue—as shown by the 1.3-percent average hike in the cost of goods in January—with the depressed prices of oil.
The downside, however, is the jobs of overseas Filipino workers (OFWs) are threatened.
Economic Planning Secretary Emmanuel F. Esguerra said that, as lower oil prices are seen to continue this year, the government must prepare for the possibility that some OFWs may be sent home.
“Such developments could adversely affect overseas Filipino workers, as the governments of the said economies implement austerity measures, cut back on subsidies, postpone infrastructure outlays and raise taxes,” Esguerra said.
“The government should actively extend assistance to displaced workers, including retraining, livelihood, reintegration or placement services,” he added.
The low oil prices being experienced globally, Esguerra said, has already resulted in the slowdown of inflation in the country.
In January the Philippine Statistics Authority (PSA) said inflation slowed to 1.3 percent, from 2.4 percent in January 2015.
It is also slower than the 1.5-percent inflation rate posted in December 2015. The January 2016 inflation, however, is still within the Bangko Sentral ng Pilipinas’s target range of 0.8 percent to 1.6 percent for the period.
The PSA said cheaper oil prices kept the prices of food and nonfood items, such as transportation prices, low during the period.
“Domestic prices of petrol—gasoline, liquefied petroleum gas, diesel and gasoline—continued to go down. This was still due to persistent global oversupply and record stockpile of crude oil, which weakened prices of Dubai oil, Brent and West Texas Intermediate [WTI],” said Esguerra, who is also the Neda director general.
Esguerra also said price reductions in electricity, gas and other fuels also continued due to lower generation cost. However, he said, this was at a slower pace than in December 2015, due to higher transmission charges.
In January the Neda said prices of food items such as fish, fruits, vegetables, milk, cheese and eggs were stable. Meanwhile, Esguerra said there are still upside pressures that will support higher inflation in 2016. These include the impact of the El Niño on agriculture production.
“But for the first few months of 2016, risk of higher food prices remain. While it is noted that El Niño will gradually weaken beginning next month, the onset of the summer season may constrain farm output,” Esguerra said.
“Guided by the Roadmap for Addressing the Impact of El Niño, or RAIN, accurate determination of food import requirements to avoid supply disruptions is important to keep inflation stable in the coming months,” he added.
The RAIN contained the government’s road map to address the impact of the El Niño, particularly on farmer’s incomes, power, and health.
The Neda earlier said interventions to mitigate the impact of El Niño on 66 provinces will require P19.2 billion. Of this amount, some P7.5 billion is required for the remainder of this year and P11.7 billion is needed next year.
The interventions include cash-for-work programs; water management interventions, particularly for irrigation; and other interventions.
To address the needs of these provinces, the Neda said the government will implement cash-for-work programs which are estimated, to cost P2.9 billion this year and P7.3 billion in the first semester of next year.