By Francis Allan L. Angelo
Finance Secretary Ralph G. Recto confidently announced that the Philippines’ February inflation rate of 3.4% is well within the government’s target range of 2% to 4%. This statement comes as the nation braces for the peak of the El Niño phenomenon, which is expected to persist until May 2024.
“The government has a comprehensive plan in place––the Reduce Emerging Inflation Now or REIN––to keep the prices of goods and services stable and affordable,” Secretary Recto said in a press statement.
His remarks underscore the administration’s commitment to maintaining inflation within manageable levels despite the ongoing climate challenges.
Secretary Recto reinforced the administration’s dedication to economic stability, stating, “As I have said before, reducing inflation and protecting the purchasing power of Filipinos is a top priority of this administration.” Both the government and the Bangko Sentral ng Pilipinas (BSP) are working in tandem to ensure that the policies in place facilitate growth while keeping prices stable.
Inflation is the rate at which the overall prices of goods and services have increased over time.
The inflation rate in February 2024 saw a modest uptick to 3.4% from 2.8% in January, within the BSP’s forecast of 2.8% to 3.6% for the month. This brings the year-to-date (YTD) inflation rate to 3.1%.
The main contributors to February 2024 inflation were food and non-alcoholic beverages (1.7 percentage points (ppt) of the 3.4% overall inflation), restaurants and accommodation services(0.5 ppt), and housing rentals (0.4 ppt).
Food and non-alcoholic beverages inflation slightly rose to 4.6% in February from 3.5% in the previous month mainly due to rice (2.1 ppts contribution) as well as flour, bread, and other bakery products (0.2 ppt). Meanwhile, prices of vegetables (-0.3 ppt) decelerated in February.
The increase in rice inflation in February at 23.7% year-on-year (YoY) is mainly due to higher rice prices domestically and internationally.
Factors such as El Niño have impacted major rice-exporting countries like Thailand and importers alike have created supply-demand imbalances. Additionally, export curbs in India, the largest rice exporter, contributed to a surge in international rice prices.
Meanwhile, non-food inflation registered a slight uptick at 2.4% in February 2024, from 2.0% in the previous month. The main contributors were restaurants and accommodation services (0.5 ppt), housing rentals (0.4 ppt), and personal care (0.2 ppt).
Nevertheless, these were offset by the continued deceleration of electricity, gas, and other fuels (4.3% from 4.7% in January 2024) as well as the operation of personal transport equipment (-1.5% from 6.5%).
In response to these challenges, the DOF is ensuring the vigorous execution of the REIN plan, which includes expedited budget execution to bolster agricultural production, the release of funds for the Rice Competitiveness Enhancement Fund (RCEF), and continued distribution of Fertilizer Discount Vouchers (FDVs).
The Department of Budget and Management (DBM) has already approved the release of PHP 455.59 million for the Rice Competitiveness Enhancement Fund (RCEF) for the first quarter of 2024 to fund programs focusing on farm productivity and food security.
Moreover, the government is pursuing rice trade agreements with countries such as India, Vietnam, and Cambodia to secure a stable rice supply. It is also speeding up the El Niño Mitigation and Adaptation Plan and implementing measures to combat the impacts of climate-related disasters.
The interventions extend beyond food security, with the government planning to issue guidelines for a toll rate hike exemption for trucks transporting agricultural goods, providing fuel subsidies for the transport sector, and ensuring a stable electricity supply to moderate non-food inflation.
Secretary Arsenio M. Balisacan of the National Economic and Development Authority (NEDA) has reassured the public that the Philippine government is steadfast in its commitment to monitoring food supplies and prices, with a focus on keeping food affordable for Filipino families, particularly those most at risk.
Amidst the complexities of the economic environment, Secretary Balisacan emphasized the necessity for vigilance against inflation.
“As we navigate the economic landscape, it is imperative that we remain vigilant and proactive in our approach to managing inflationary pressures,” he said.
The Secretary pointed out the challenges posed by the potential strong El Niño weather pattern, which could significantly impact food prices and amplify the strain on household finances due to rising transportation costs, electricity rates, and volatile oil markets.
In response to these challenges, NEDA is actively developing strategies alongside relevant agencies to mitigate the economic pressures.
“We must be agile, adaptive, and forward-thinking,” Balisacan added, highlighting the government’s dynamic approach to policy formulation.
On a positive note, the Secretary reported that international rice prices are showing signs of decline, while the local supply is anticipated to rise with the dry season harvest that commences this month and extends through April.
Additionally, the Department of Agriculture (DA) is working in partnership with the International Rice Research Institute to bolster the nation’s rice production, which is a key staple for Filipinos.
The agricultural sector is also bracing for a breakthrough as the country awaits the Food and Drug Administration’s approval for the next phase of the vaccine test against African Swine Fever (ASF).
Once the ASF vaccine is deemed effective, the government plans to launch a comprehensive vaccination campaign to secure the pork supply chain, which is a critical component of food security in the Philippines.
