MANILA — The National Economic and Development Authority (NEDA) expects the current surge in inflation, which is due in part to an overhaul in the taxation system, to be temporary and will normalize towards the end of the year.
“The current surge in inflation is partly an initial reaction to the implementation of TRAIN (Tax Reform for Acceleration and Inclusion) and is expected to be short-lived and should taper off over the coming months,” said Socioeconomic Planning Secretary Ernesto Pernia in a statement.
The TRAIN law, starting Jan. 1 this year, imposes higher excise taxes on sweetened beverages, oil, vehicles and cigarettes to compensate for reduced personal income tax rates.
Pernia also attributed higher inflation to the slew of world oil price increases and the depreciation of the peso.
The Philippine Statistics Authority (PSA) on Friday reported that headline inflation accelerated to 4.5 percent in April 2018, higher than the 4.3 percent last month and the 3.2 percent in April 2017.
Last month’s figure brought year-to-date average to 4.1 percent, slightly above the full-year target of 2 to 4 percent.
Pernia, also NEDA Director-General, said the government thus needs to remain vigilant against price pressures and to implement mitigating measures immediately.
The NEDA expects replacing quantitative restrictions on rice imports with tariffs can reduce local rice prices and bring down inflation.
It said the unconditional cash grants to the poorest 50 percent of households, and fuel subsidies for jeepney drivers through the Pantawid Pasada Program, will also help ease the effects of higher prices on lower-income households. (PNA)
