Socio-economic Planning Secretary Dante Canlas told reporters yesterday that government has begun revisiting its key economic figures and although no decision has been made, it may revise the national average inflation rate target for the year.
Canlas said the preliminary numbers being used by the National Economic and Development Authority pegged the inflation rate at five to six percent for the whole of 2002.
However, he said the recent behavior of the inflation rate indicates that there may be room to lower the target. "We have made some runs and it would seem that the rate could be four to five percent for 2002," he said.
According to Canlas, the inflation rate has been remarkably stable in 2001 and this is a trend that is likely to continue in 2002, especially if government keeps to its prudent fiscal policy.
Canlas said inflation rate for January is likely to hit four percent, higher than the 3.9-percent inflation rate in December. But he said this comes as no surprise since some enterprises are expected to make their adjustments after the holidays.
Canlas said he can not speculate on whether the relative stability of the inflation rate in 2002 will lead to another round of interest rate cuts by the Bangko Sentral ng Pilipinas but he said this will give central bankers ample room to maneuver.
According to the economic secretary, the government’s optimism over the 2002 inflation rate came from the continued stability of domestic food prices which in turn was due to the stability in supply.
"Trade liberalization as well as good domestic production have prevented food prices from going up," he explained. "These same factors will be at play this year and it will prevent price shocks in food commodities."
Canlas said world crude oil prices are also expected to remain bearish this year despite the efforts of the oil cartel to cut back on production in order to jack up prices.
"Stable petroleum prices, stable food prices and prudent macro-economic policies all point to lower inflation and we are confident that we will meet these targets," Canlas said.
Canlas said a downward revision in inflation targets will not affect all other macro-economic targets.