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Yesterday, the Philippine Statistics Authority released the inflation data for February 2025 at only 2.1 percent, nice. Inflation in recent years: 3.1 percent in February 2017, 3.7 percent in February 2018, 3.8 percent in February 2019, 2.5 percent in February 2020, 4.2 percent in February 2021, 3.0 percent in February 2022, 8.6 percent in February 2023, 3.4 percent in February 2024 and 2.1 percent in February 2025.
So this is the lowest inflation for February over the past eight years. Good, kudos to the government economic team and Philippine entrepreneurs.
Low food inflation this year, at only 2.6 percent in February versus 4.6 percent in February 2024 has greatly contributed to the low overall price movement because food and non-alcoholic beverages constitute the biggest weight in overall inflation.
Other contributors are: housing, water, electricity, gas and other fuels, only 2.1 percent; transport, -0.1 percent vs 2.1 percent in February 2024; and health, only 2.1 percent vs 3.2 percent in February 2024.
Low inflation means high consumer confidence, and high household and private spending means high overall GDP growth because household consumption constitutes 73 percent of GDP.
In the first quarter of 2024, average inflation was 3.3 percent and household spending growth was 4.6 percent. In the first two months of 2025, inflation averaged at 2.5 percent only and household spending growth in Q1 2025 could be around 5.5 percent or higher.
I checked the press statements of the economic team. Budget Secretary Amenah Pangandaman said that they “welcome the news of lower-than-expected inflation and it reflects the intensity of gains from previous actions to achieve price stability. DBM will continue supporting programs which ensure that benefits are felt among the marginalized and lower-income deciles of the population.”
Finance Secretary Ralph Recto said that “Our fiscal consolidation and economic measures have contributed to declining trend in overall inflation. Ongoing measures include fast-track importation permits especially of key food commodities, implementation of lower tariff of rice under EO 62, the National Food Authority to release at least 25,000 metric tons (MT) of rice monthly through Food Terminal Inc. while continuing to support local farmers through palay procurement. Lower inflation contributes to higher business and consumer confidence leading to more economic activities, more revenue collections to fund more infrastructure and development projects nationwide.”
NEDA Secretary Arsenio Balisacan said that “The government will sustain its efforts to keep inflation low and manageable to protect the purchasing power of Filipinos… our efforts to combat inflationary pressures are working.”
Last week, the Bureau of the Treasury released the full year 2024 cash operations report. The budget deficit was P1.51 trillion, similar to a deficit of P1.51 trillion in 2023 and lower than the deficit of P1.67 trillion in 2021 and P1.61 trillion in 2022.
Financing or net borrowing is declining: P2.25 trillion in 2021, P1.97 trillion in 2022, P2.07 trillion in 2023, and P1.31 trillion in 2024. Good. We must aim for borrowings below P1 trillion a year because high public debt stock means high annual interest payment for us.
And yesterday the third oral arguments at the Supreme Court about PhilHealth idle funds transfer to the National Treasury continued.
During the second oral arguments last Feb. 25, Solicitor General Menardo Guevarra argued that majority of PhilHealth’s P60 billion excess funds remittance to the National Treasury were used to finance critical health and social service programs, including settlement of long-overdue Public Health Emergency Benefits and Allowances for Health Care and Non-Healthcare Workers during the COVID crisis, and Medical Assistance to Indigent and Financially Incapacitated Patients.
Then some P13 billion of the P60 billion was used to fund government counterpart financing for foreign-assisted infrastructure like counterpart financing for the Panay-Guimaras-Negros Island Bridges; the Metro Manila Subway Project; the Philippine Multi-Sectoral Nutrition Project; the Mindanao Inclusive Agriculture Development Project; the Cebu-Mactan Bridge and Coastal Road Construction Project; the North-South Commuter Railway System.
At end-2024, PhilHealth has P498 billion in cash, more than enough to continue increasing its inpatient, outpatient and special benefit packages.
Lower inflation, lower deficit and borrowings by tapping idle funds of some big government corporations like PhilHealth. These will contribute in pushing for higher economic growth, higher job creation for our people without resorting to more taxation or more borrowings.
