The Philippines’ overall inflation level further declined to 4.1 percent in November 2023 from 4.9 percent in the previous month, which is well within the Bangko Sentral ng Pilipinas (BSP)’s forecast of 4.0 to 4.8 percent for the month

This brings the year-to-date (YTD) overall inflation rate to 6.2 percent, closer to the Development Budget Coordination Committee (DBCC) assumption of 5.0 to 6.0 percent for the full year 2023.

“The sharp drop in inflation for the month of November is a testament to the Marcos, Jr. administration’s whole-of-government effort to moderate rising commodity prices while protecting the most vulnerable sectors from its effects,” Finance Secretary Benjamin E. Diokno said.

The major drivers of the downtrend in inflation for November were lower year-on-year (YoY) inflation in food and non-alcoholic beverages (from 7.0 percent in October 2023 to 5.7 percent); transport (from 1.0 percent to -0.8 percent); and restaurants and accommodation services (from 6.3 percent to 5.6 percent).

Meanwhile, the top three commodity groups that contributed to the November 2023 overall inflation were food and non-alcoholic beverages with 2.1 percentage points (ppt) out of the overall 4.1 percent; restaurants and accommodation services (0.5 ppt); and housing, water, electricity, gas and other fuels (0.5 ppt).

Food inflation also slowed down to 5.8 percent in November from 7.1 percent in the previous month. In the same period a year ago, food inflation was significantly higher at 10.3 percent.

Food continued to have the biggest inflation contribution for the month at 2.0 ppt or 49.0 percent of the overall inflation rate.

The main contributors to food inflation were rice (1.4 ppt); fish and other seafood (0.3 ppt); and milk and other dairy products and eggs (0.2 ppt).

Among food commodities, rice remains the biggest contributor to headline inflation (1.4 ppt), as its inflation continued to accelerate at 15.9 percent YoY and 2.7 percent month-on-month (MoM).

Rice inflation in November still increased despite the harvest season after declining by 4.0 percent MoM in October, partly due to an uptrend in the cost of grains caused by relatively lower palay output and coming from a low price base for well-milled and special rice last year.

Non-food inflation continued to decelerate at 2.9 percent from 3.4 percent in the previous month.

Non-food inflation was mainly driven by the increase in prices of food and beverage serving services (0.54 ppt), housing rentals (0.48 ppt), personal care (0.19 ppt), as well as water supply and miscellaneous services relating to the dwelling (0.14 ppt).

The inflation in restaurant services remains partly attributed to its sustained demand and the second-round effects of higher prices of food commodities, while high rental cost is partly attributed to increased demand for housing as economic activities normalize following the pandemic.

Meanwhile, the high passenger transport inflation in November was due to the implemented fare hikes, particularly the fare increase for UV express vehicles, LRT, and jeepneys.

Core inflation, which excludes selected volatile food and energy items, continued to decline to 4.7 percent from 5.3 percent in the previous month, bringing the average core inflation to 6.8 percent.

The National Capital Region (NCR) also saw a downtrend in inflation to 4.2 percent from 4.9 percent in October 2023. Likewise, the inflation rate for all regions outside NCR decelerated to 4.1 percent from 4.9 percent in October 2023.

Government measures to mitigate inflation

To help further reduce the upward pressures on the price of rice, President Ferdinand R. Marcos, Jr. issued a directive to implement various measures to ensure the affordability of rice prices and to protect consumers after lifting the price ceiling in October.

Furthermore, intensified investments in flood control infrastructures and post-harvest facilities will stabilize the supply of key agriculture commodities.

These efforts will complement the implementation of the El Niño Mitigation and Adaptation Plan, as well as the expedition of the government’s responses to mitigate the impact of calamities and natural disasters.

The Bureau of Customs (BOC) has also been diligently coordinating with the Philippine Competition Commission (PCC) and the Department of Justice (DOJ) in the fight against anti-competitive practices by monitoring unfair trade practices and filing legal cases.

To ensure food security amid global threats of El Niño and other natural calamities, trade protectionism by other countries, and geopolitical tensions, intensified efforts to increase agricultural productivity will be supplemented by measures to improve importation of what is only necessary.

The government is currently working on a rice importation agreement with India, while the Inter-agency Committee on Inflation and Market Outlook (IAC-IMO)––co-chaired by the Department of Finance (DOF) and the National Economic and Development Authority (NEDA)––is continuously coordinating with the concerned agencies in the streamlining of guidelines and processes of importation through reviews of past issuances on import processes, and the possible expansion of Unilateral Minimum Access Volume (MAV) of select commodities, in consultation with stakeholders.

Meanwhile, the Committee on Tariff and Related Matters is conducting its assessment of the possible extension of the reduced Most Favored Nation (MFN) tariff rates of commodities specified under Executive Order (EO) No. 10.

To mitigate non-food inflation, the government continues to implement and monitor various demand and supply management measures for key commodities, particularly energy and water.

On oil, the government aims to issue guidelines for the voluntary increase of ethanol blend for gasoline, which could help decrease the cost of gasoline.

“The DOF also supports the proposal to amend the 2024 General Appropriations Act [GAA] provision on fuel subsidies for the transport sector, which will enable the timely distribution of subsidies to drivers and operators,” Secretary Diokno said.

On the second round effects of toll rate hikes on food inflation, the IAC-IMO is working closely with tollway concessionaires for the implementation of toll rate hike exemptions for delivery trucks catering to agricultural products.

On energy, the expected completion of the Mindanao-Visayas Interconnection Project will help moderate energy prices in the Visayas region by balancing the excess energy demand from Visayas and the energy surplus in Mindanao.

The government will also prudently balance the timely and gradual increase in the minimum wage while ensuring limited second-round effects on the prices of consumer goods.

The IAC-IMO will continue to monitor on-the-ground developments, such as the demand, supply, and prices of essential food commodities (i.e., rice, garlic, onion, pork, fish, chicken, sugar, and corn) as well as non-food items (i.e., rent, water supply, electricity, transport, education, and wages) which may contribute to food and non-food inflation through its new dashboard.

“The close monitoring of these economic indicators is necessary for the timely formulation and implementation of government policies to mitigate inflation in food commodities and non-food items,” Secretary Diokno said.