The National Economic and Development Authority (NEDA) assured the public today (February 6) that the government would continue monitoring food supply and prices in the country in anticipation of the El Niño phenomenon spreading across more areas, as inflation in January 2024 further eased to its lowest since October 2020.
The Philippine Statistics Authority reported that the country’s inflation rate significantly slowed to 2.8 percent in January 2024 from 3.9 percent in December 2023 to 8.7 percent in the same period last year. This is the lowest recorded since the 2.3 percent inflation rate registered in October 2020.
The most significant contributor to the lower inflation rate is the easing of food inflation to 3.3 percent from last month’s 5.5 percent due to the decrease in the prices of corn (-4.3% from -3.5%), oils and fats (-4.3% from -3.6%), meat (-0.7% from 0.2%), and sugar (-1.0% from 0.1). Rice inflation, however, accelerated to 22.6 percent in January from 19.6 percent in the previous month.
NEDA Secretary Arsenio M. Balisacan said the Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO) will continue to closely monitor the prices of rice and other goods to provide the President and the Cabinet with timely and appropriate policy recommendations and ensure stable and affordable prices of commodities.
He added that with the El Niño lingering until May, “we introduce stop-gap measures, as necessary, such as allowing further imports on key commodities until our supply stabilizes at prices affordable to consumers while ensuring remunerative prices for local producers.”
Earlier, President Ferdinand R. Marcos Jr. issued Executive Order No. 50, extending until the end of 2024 the reduced tariff rates of pork, corn, and rice. He also reactivated the Task Force El Niño through Executive Order No. 53, which tasks concerned agencies to intensify the government’s efforts to secure sufficient water and food supply, power, health, and public safety nationwide.
The President also directed concerned agencies to implement the National Adaptation Plan (NAP) 2023-2050 to increase communities’ resilience against extreme weather disturbances.
Balisacan said the Department of Agriculture would continuously monitor on-the-ground situations and adequately guide the government in addressing food production concerns. The Philippines also recently signed a Memorandum of Understanding with Vietnam for the continuous supply of at least 1.5 to 2 million metric tons of rice annually.
Moreover, the Department of Social Welfare and Development will expand its National Food Stamp program to cover 300,000 households in 2024. He said this measure will help the government assist the most vulnerable families during the El Niño season.
Meanwhile, the Bangko Sentral ng Pilipinas (BSP) said the January 2024 inflation of 2.8 percent is within its forecast range of 2.8 to 3.6 percent.
This inflation outturn is consistent with the BSP expectations that inflation will likely moderate in Q1 2024 due to largely to negative base effects and some easing of supply constraints affecting key commodities.
However, inflation could temporarily accelerate above the target range from Q2 2024 due to the impacts of El Niño weather conditions and positive base effects.
The balance of risks to the inflation outlook still leans significantly towards the upside.
Key upside risks are associated with potential pressures emanating from higher transport charges, increased electricity rates, higher oil prices, and higher food prices due to strong El Niño conditions.
Meanwhile, the impact of a relatively weak global recovery and the government measures to mitigate the effects of El Niño could ease some price pressures.
Looking ahead, the Monetary Board deems it necessary to keep monetary policy settings sufficiently tight until a sustained downtrend in inflation becomes evident.
The BSP said it will consider the latest inflation and GDP outturns for the Monetary Board’s policy meeting on 15 February 2024.