STAPLE FOOD. Rice prices are displayed at a retail store in San Andres, Manila on May 6, 2024. The Philippine Statistics Authority said on Thursday (Sept. 5) that rice inflation went down to 14.7 percent in August this year from 20.9 percent in July. (PNA photo by Yancy Lim)
MANILA – Headline inflation slowed to 3.3 percent in August this year from 4.4 percent in July due to the decrease in food inflation, the Philippine Statistics Authority (PSA) said.
In a briefing Thursday, National Statistician Dennis Mapa said the headline inflation last month was also lower than the 5.3 percent recorded in August 2023.
The latest data brought the year-to-date headline inflation to 3.6 percent which is within the government's 2 to 4 percent target.
Mapa said the downtrend in the overall inflation in August was primarily brought about by the slower annual increment of food and non-alcoholic beverages at 3.9 percent from 6.4 percent in July.
In particular, food inflation eased to 4.2 percent from 6.7 percent.
The reduction was due to the decline in rice inflation which went down to 14.7 percent from 20.9 percent in July.
It was the lowest rice inflation recorded since the 13.2 percent recorded in October 2023.
Rice inflation is expected to go down to a single-digit level this month due to base effects, Mapa said.
Vegetables, tubers, plantains, cooking bananas, and pulses meanwhile, which recorded a year-on-year decline of 4.3 percent in August from 6.1 percent increase in July, also contributed to the slowdown in food inflation.
Lower inflation rates were likewise noted in flour, bread, and other bakery products, pasta products and other cereals, 2.4 percent from 2.6 percent; meat and other parts of slaughtered land animals, 4.0 percent from 4.8 percent; and ready-made food and other food products not elsewhere classified, 5.5 percent from 6.0 percent.
Core inflation meanwhile, which excludes selected food and energy items, slowed down to 2.6 percent in August 2024 from 2.9 percent in the previous month.
In a separate statement, the National Economic and Development Authority (NEDA) said the continued easing of inflation and stable prices would significantly benefit households and businesses and will promote increased consumer spending and stimulate economic activity.
“The sustained easing of inflation will support growth in household consumption, which elevated prices have long suppressed. Low-income households will benefit from the decline in food inflation, as food constitutes more than half (51.4 percent) of the consumption of the bottom 30 percent of households,” NEDA Secretary Arsenio Balisacan said.
“Moreover, as businesses have identified persistent inflationary pressure as a significant concern, the recent stability and moderation in inflation will encourage investments, especially as borrowing costs are declining. Most importantly, the appetite for business expansion will improve as consumer spending increases,” he added.
Balisacan noted however that while inflation continues to trend downward, primarily due to reduced import tariffs on rice, potential pressures could emerge from higher electricity rates and above-normal weather disturbances.
“The government is prepared to address these pressures to ensure stable inflation. Preparations to counter the effects of the La Niña phenomenon are underway, including improvements in early warning systems, the utilization of communication systems to issue warnings about dam openings, measures to address the potential accelerated speed of livestock diseases, and greater involvement of local government units in information dissemination, are in progress. Notably, the government has allocated PHP15 billion for national risk reduction in 2024,” Balisacan said.
Balisacan said the Department of Agriculture (DA) will expand the Kadiwa ng Pangulo program in the Visayas and Mindanao to enhance access to affordable agricultural products.
The DA is also collaborating with various food manufacturers to supply Kadiwa stores with essential goods, including canned sardines, cooking oil, condiments, fresh fish, and poultry.
Aside from these, the Energy Regulatory Commission is also urged to expedite the full implementation of the lower retail competition and open access threshold.
The ERC is considering reducing the threshold from 500 kilowatt (kW) to 100 kW, which would enable more electricity end-users to participate in the program.
“The government will continue to implement measures to reduce further inflationary pressures, including enhancing agricultural productivity, expanding logistics infrastructure, and ensuring the efficient delivery of social services. These efforts are crucial not only for stabilizing prices but also for ensuring that economic growth translates into tangible improvements in the lives of all Filipinos,” Balisacan said.
Medium-term inflation path
In a separate statement Thursday, the Bangko Sentral ng Pilipinas (BSP) said the latest inflation outturn is consistent with its assessment that inflation would revert to the target range in August after the temporary uptick observed in July due to negative base effects and the easing of supply pressures for key food items, particularly rice.
The implementation of the rice tariff reduction will help in easing inflation in the coming months, the BSP said.
"The balance of risks to the inflation outlook continues to lean toward the downside for 2024 and 2025 with a slight tilt to the upside for 2026. The downside risks are linked mainly to lower import tariffs on rice, while upside risks could come from higher electricity rates and external factors," the BSP said.
The BSP assured that the Monetary Board would continue to take a measured approach in ensuring price stability conducive to balanced and sustainable growth of the economy and employment.
‘Better for consumers’
House Ways and Means Committee chair and Albay Rep. Joey Salceda described the August 2024 inflation rate as a "much-needed breathing room" for consumers.
"The inflation rate was largely driven by rice and corn prices, which were higher year-on-year, due to base effects. But if you look at month-on-month figures, rice and corn are actually cheaper now than they were last month. So, the trend is actually even better for consumers in that perspective," Salceda said.
He said the month-on-month inflation for meat has been negative and even sugar prices had decreased both on a month-on-month and year-on-year basis.
He said these "slightly favorable" trends are essential as Christmas season approaches.
"We need these numbers moving forward for consumer confidence, especially as the biggest consumer spending event of the year – the Christmas season – dawns. This is often the only chance many firms get to ramp up sales, so it will be very crucial to see whether consumers get some extra leg room for discretionary spending due to lower consumer prices," he said.
Meanwhile, Salceda underscored the need to keep track of the momentum for rice and corn prices.
"Corn remains a very strong sticking point because the transmission to meat prices, especially poultry, can be very quick," he said, noting that controlling corn prices would be critical to prevent an upward spiral in food prices.
"All in all, these results are positive. I hope President Marcos and his agriculture and food security team, led by the Secretary of Agriculture, will remain hell-bent on ensuring that the price of rice and corn will continue to decline in the coming months – especially after harvest season next month for rice," he said. (with a report from Filane Cervantes/PNA)
