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MANILA, Philippines – Malacañang welcomed as a “positive development” the reduction of the country’s headline inflation to 2.4 percent in August from 2.7 percent last July, although the figure also suggests that economic activity continued slow as the country went through its worst recession in decades.
Presidential spokesman Harry Roque said the slow price inflation was a “positive development” because it kept commodity prices stable, ensuring that Filipinos did not go hungry.
“Keeping commodity prices stable in this period of global health crisis and economic uncertainty remains our top priority. This is in line with President Duterte’s vote that no Filipino goes hungry amid the COVID-19 pandemic, ”the Palace official said in a statement.
He added that the government “will continue to monitor commodity prices and ensure that there is an unhindered flow in the movement and delivery of commodities to other locations, despite localized actions imposed in some areas.”
Roque made the remarks after the Philippine Statistics Authority reported that inflation fell to 2.4 percent in August from 2.7 percent last July.
Roque also assured the public, including some seven million unemployed Filipinos, that the government would continue its agricultural policies and programs to boost long-term food production, saying he was “encouraged by the data showing the resilience of the agricultural sector. and that demonstrate the effectiveness of the president’s policies and programs for farmers and fishers. “
On the other hand, the Bangko Sentral ng Pilipinas (BSP) was more cautious, saying that pressures on prices for basic goods and services would likely remain silent in the short term with a lower than expected inflation rate below your own forecast.
BSP Governor Benjamin Diokno said the August inflation rate of 2.4 percent was lower than the BSP forecast range of 2.5 to 3.3 percent, “but is consistent with the expectation that inflation will remain benign on the policy horizon. “
“The balance of risks is tilting downward due in large part to potential disruptions to national and global economic activity from the ongoing pandemic,” he said.
Headline inflation declined in August from 2.7 percent in July, bringing the annual average to date to 2.5 percent. This was mainly due to the slowdown in inflation for heavily weighted food and non-alcoholic beverages, which fell to 1.8 percent during the period, from 2.4 percent in the previous month.
Given this scenario, the central bank said that the prevailing interest rate environment and ample liquidity in the financial system, reflecting the BSP’s policy of significant monetary easing and improving liquidity, was considered to provide sufficient support to the economic activity.
To date, the central bank has cut the key interest rate by a total of 175 basis points during the course of the COVID-19 pandemic, reduced banks’ mandatory reserve ratio by 200 basis points, expanded a series of aid measures for financial institutions and lent the Philippine government about P300 billion through direct purchases of bonds. In total, the BSP has injected an estimated P1.3 trillion into the national financial system to prop up the economy.
As such, Diokno said that “the first signs of recovery in domestic activity are being noted, and further improvements are expected as containment measures are further relaxed and businesses and households better adapt to the post-crisis operating environment. pandemic”.
“The BSP will continue to evaluate the transmission of the BSP’s policy actions to the economy along with the recently approved fiscal measures to address the public health crisis,” he added, stating that the central bank “is ready to deploy all available measures. in his toolbox in fulfillment of his policy mandate as he continues to assess the impact of the global health crisis on the national economy. “
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