MANILA, Philippines- Despite concerns about rising global food and fuel prices, the Philippines will retain its inflation target of 3% to 5% for 2012 up to 2014. Inflation averaged 4.8% in 2011.

In the statement on Friday, February 24, the government's inter-agency economic planning body, the Development Budget Coordination Committee (DBCC) explained that inflation targets should be maintained as "an anchor for the public's expectations about future inflation" so the public can "formulate their investment, consumption, as well as saving decisions with greater certainty."

In general, it is important to maintain low and stable inflation since high inflation reduces consumer's purchasing power. For example, a customer would need more money to buy the same loaf of bread after a spike in inflation.

There are worries the global cost of oil may increase after Iran's recent refusal to sell oil to England and France.

As Philippine Institute for Development Studies President Josef T. Yap explained at a PIDS and World Bank Forum on Thursday, February 23, food prices typically move up and down with oil prices.