Finance Secretary Ralph G. Recto assured the public that the government is carefully balancing food and non-food inflation mitigation measures by conducting regular reviews and adjustments of policies to ensure that Filipinos’ purchasing power is well protected.
“We are vigilantly tracking persistent inflation drivers and employing a whole-of-government approach in crafting data-driven policy measures to effectively counter their effects in a sustainable manner. Our top priority is to ensure that the majority of Filipinos, especially the poor and vulnerable sector, benefit from these interventions,” he said.
The inflation rate of 3.9% for May 2024 is significantly lower than the 6.1% recorded in the same period last year.
This brings the year-to-date (YTD) inflation rate to 3.5%, well within the government’s target band of 2% to 4%.
The slight uptick in the inflation rate in May compared to the 3.8% in the previous month was primarily influenced by the higher year-on-year (yoy) increase in the price of housing, water, electricity, gas, and other fuels (0.9% to 0.4%) as well as transport (3.5% from 2.6%).
Notably, food inflation slowed down to 6.1% in May 2024 from 6.3% in the previous month.
This downtrend was mainly due to the slower yoy increase in the prices of vegetables, tubers, plantains, cooking bananas, and pulses (2.7% from 4.3%). Fish and other seafood had zero contribution to inflation in May from 0.4% in the preceding month.
New policy actions to mitigate food and non-food inflation
While rice posted a slower annual increase in May (23.0% from 23.9%), it remains a key concern as rice inflation is still above 20%.
Despite the global decline in rice prices, domestic prices are still high, currently ranging from PHP 51.24 to PHP 64.50 per kilo, significantly higher than last year’s PHP 40.75 to PHP 54.30 per kilo.
Hence, the NEDA Board has recently agreed to reduce the duty rate of imported rice from 35% to 15% for both in-quota and out-quota rates until 2028 to lower the price of rice further and make it more affordable.
“In May, inflation for the bottom 30% of households was higher at 5.3%, and rice inflation made up more than 80% of this. The current NEDA Board agreement aims to alleviate the plight of all Filipino consumers, especially the most vulnerable,” the Finance Chief said.
With these lower tariff rates, the Philippine Statistics Authority (PSA) estimates a substantial PHP 6.0 to PHP 7.0 reduction in the price of rice per kilo.
To further ensure food security, the NEDA Board also maintained the reduced tariff rates by at least 15% on corn, pork, and mechanically deboned meat under Executive Order (EO) No. 50, s. 2023 and EO 13 s. 2023, until 2028.
Starting June 1, 2024, an exemption from toll rate hikes was implemented for trucks transporting agricultural goods to prevent the second-round effects of toll rate increases on food inflation and ensure that food prices are kept stable for consumers.
Simultaneously, Task Force El Niño is also crafting the National La Niña Action Plan on Food Security to proactively mitigate the effects of the weather phenomenon.
Ongoing consultations with relevant operating units and regional offices regarding the rollout of the plan are being conducted by the Department of Agriculture (DA).
Moreover, to shield consumers from potential increases in electricity prices due to MERALCO’s proposed cost recovery, the IAC-IMO has proposed to the Energy Regulatory Commission (ERC) a staggered implementation of the cost recovery scheme over at least twelve months to mitigate its inflationary impact.
“Rest assured, the government is continuously formulating sustainable solutions that will manage the price increases of other commodities and keep inflation within our target range. The solutions on the food security front are guaranteed to work in tandem with our long-term goal of modernizing our agriculture sector,” Secretary Recto said.
