Finance Secretary Ralph G. Recto has emphasized that the slower inflation rate in August 2024 demonstrates the effectiveness of the government’s targeted interventions to stabilize food prices, and assured the public that it will sustain the downward momentum by staying vigilant against risks.
“We will not be complacent. While we are now seeing the positive results of our measures, we are proactively monitoring potential inflationary risks to address them in a timely and targeted manner,” he said.
“Hindi natin hahayaang masayang ang lahat ng ating mga pinaghirapan. Sa katunayan, mas gagalingan pa natin sa mga susunod na buwan para masigurong tuluy-tuloy ang pagbaba ng presyo ng mga bilihin sa bansa. Makatutulong ito sa mga ordinaryong mamamayan, sa mga negosyo, at sa buong ekonomiya,” the Finance Chief added.
Headline inflation fell to 3.3% in August 2024, the lowest since January of this year.
This is within the Bangko Sentral ng Pilipinas’ (BSP) forecast of 3.2% to 4.0% for the month, and lower than the median estimate of 3.6% by private sector analysts.
Year-to-date (YTD), the average inflation stood at 3.6%. This is within the government’s target band of 3% to 4% for the year.
The significant drop in inflation for August was due to slower increases in the prices of food and non-alcoholic beverages (3.9% from 6.4% in July 2024); as well as a 0.2% decline in transport prices (from a 3.6% increase in July).
Specifically, food inflation significantly dropped to 4.2% in August from 6.7% in the previous month primarily due to lower inflation rates for rice as well as reduced prices of vegetables and fish.
In particular, rice inflation slowed down to 14.7% in August 2024 from 20.9% in July as the impact of the reduced rice tariff rate policy started to take effect.
The month-on-month (m-o-m) reduction in the retail price of rice was recorded from 0.47% to 0.53%.
“The lower rice tariffs are already showing results. Rice inflation is slowing down and rice imports grew by 77% in August, according to the latest data from the Bureau of Customs (BOC). We expect rice prices to drop more noticeably in September as the rice imported at lower tariffs in August reaches the local market,” Secretary Recto said.
Meanwhile, core inflation also eased to 2.6% in August from 2.9% in the previous month, indicating a continued price deceleration in non-volatile items.
This drop in both headline and core inflation supports the BSP’s decision to cut interest rates by 25 basis points in August.
Inflation also decelerated across various sectors, benefiting both the National Capital Region (NCR) and areas outside the NCR, as well as those from the bottom 30%-income households.
“The sustained drop in inflation will boost our household consumption for the rest of the year as well as encourage more investments, particularly as borrowing costs decrease,” the Finance Chief said.
New interventions to address inflation
The Department of Agriculture (DA) is stepping up its efforts to implement targeted measures that will safeguard the welfare of farmers and ensure the nation’s food security.
On August 29, 2024, the DA issued Memorandum Circular (MC) No. 35 extending the required ship-out date for imported rice to 60 days from 30 days. This gives local importers more time to secure better rates amidst price volatility and helps lower retail prices by reducing landed costs.
The government also supports the extension of the Rice Competitiveness Enhancement Fund (RCEF) until 2030 and its planned increase to enhance local rice production and address the needs of rice farmers.
In addition, the DA will expand the KADIWA ng Pangulo (KNP) program this month to Visayas and Mindanao, establishing at least 60 stores nationwide and providing affordable agricultural products. This includes rice affordably priced at PHP 29.0 per kilo which will cater to vulnerable sectors.
Meanwhile, the DA will procure and provide African swine fever (ASF) vaccines for small-hold swine raisers and explore interventions to incentivize ASF-affected swine raisers in aiding the revival of the swine industry.
The DA has also initiated strategies for water management in anticipation of La Niña, including desilting irrigation canals as well as repairing and rehabilitation of irrigation systems, among others.
Efforts to address non-food inflation are also intensified such as the staggered implementation of electricity rate hikes to mitigate the impact of electricity price increases on consumers.