The National Economic and Development Authority (NEDA) assures the public that the government will strengthen its measures to ensure food security, protect consumers, and provide assistance to farmers.
The Philippine Statistics Authority reported today that inflation in August rose to 5.3 percent from 4.7 percent in July 2023, bringing the year-to-date inflation to 6.6 percent. This development is mainly due to higher inflation in food prices, particularly rice and vegetables.
“Despite the ongoing challenges we encounter, such as severe weather conditions and trade limitations imposed by other nations, our objective remains to achieve an inflation rate between 2 and 4 percent by the year’s end,” said NEDA Secretary Arsenio M. Balisacan.
Rice inflation increased to 8.7 percent in August from 4.2 percent in July 2023.
The expected reduction in rice production due to El Niño and the export ban recently imposed by major rice exporters such as India and Myanmar led to higher international rice prices.
In addition, the alleged hoarding incidents, artificial shortage, and speculative business decisions of market players may have put further upward pressure on the domestic retail price of rice.
Vegetable inflation, on the other hand, rose to 31.9 percent from 21.8 percent due to production losses from the enhanced monsoon rains and Super Typhoon Egay.
The NEDA chief stressed the importance of providing comprehensive assistance to rice and vegetable farmers to help them increase their production. This is in response to the adverse effects of continuous rains last month and the anticipated impact of El Niño on domestic rice and vegetable production in the first quarter of 2024.
He added that the Department of Agriculture and the National Food Authority augment support to farmers in the drying and milling palay in the upcoming harvest season.
Moreover, NEDA recommends hastening the implementation of programs to facilitate the swift recovery of production in typhoon-affected areas.
Furthermore, to aid consumers—particularly the poor—Balisacan said that the government needs to accelerate the Food Stamp Program (FSP) rollout. The FSP is one of the priority programs of the Department of Social Welfare and Development, which will provide PHP 3,000 worth of food credits to target beneficiaries each month for six months.
Other government support to consumers includes the continued implementation of Kadiwa stores, targeted cash transfers, and the Department of Trade and Industry’s (DTI) Diskwento Caravan.
The country’s chief economic planner has also called for a review of the existing tariff levels on rice to help lower the cost of this staple for consumers while considering the impact of this intervention on local producers.
“To partially counterbalance the rise in global prices and alleviate the impact on consumers and households, we may implement a temporary and calibrated reduction in tariffs,” he explained.
To ensure the availability of affordable food and reduce transport costs, President Ferdinand R. Marcos Jr. recently approved the three-year food logistics action agenda of the DTI. The program aims to ensure available, accessible, and affordable food for consumers by upgrading food terminals and developing an efficient logistics system.
“Using policy levers on multiple fronts, we are confident in our ability to overcome the obstacles arising from domestic and international factors as we safeguard the interests of Filipino consumers and producers,” Balisacan said.
The Bangko Sentral ng Pilipinas (BSP) said the August 2023 inflation outturn of 5.3 percent is within its forecast range of 4.8 to 5.6 percent.
Higher prices for oil and key agricultural commodities drove inflation during the month. Inflation is likewise expected to remain elevated in the coming months due to continued impact of supply shocks on food prices and the rise in global oil prices.
Nonetheless, inflation is still projected to decelerate back to within the inflation target by Q4 2023.
The balance of risks to the inflation outlook continues to lean towards the upside owing to the potential impact of additional transport fare increases, higher-than-expected minimum wage adjustments in other regions, persistent supply constraints for key food items, El Niño weather conditions, and possible knock-on effects of higher toll rates on prices of key agricultural items.
Meanwhile, the impact of a weaker-than-expected global economic recovery remains the primary downside risk to the outlook.
The BSP said it stands ready to adjust the monetary policy stance as necessary to prevent the further broadening of price pressures as well as the emergence of additional second order effects in view of the persistent upside risks to the inflation outlook.
The BSP also continues to support the timely and effective implementation of non-monetary government measures to mitigate the impact of persistent supply-side pressures on inflation.