The Marcos, Jr. administration worked double time to protect the purchasing power of the Filipino people from high food prices, keeping inflation firmly within the government’s target range in 2024.
Year-to-date, the inflation rate stood at 3.2%, well within the Development Budget Coordination Committee (DBCC) assumption of 3.1% to 3.3%, and significantly lower than 6% in 2023.
“Isa sa pinakamagandang balita sa 2024 ang matagumpay na pagbaba ng inflation at ang patuloy na pagpapanatili nito sa ating target range, kahit na natamaan tayo ng maraming bagyo. This is a product of the whole-of-government initiatives to ensure food security for our people. Because of this, we were also able to reduce interest rates twice, which will help spur economic growth,” Finance Secretary Ralph G. Recto said.
The favorable domestic inflation outlook allowed the Bangko Sentral ng Pilipinas (BSP) to be the first in ASEAN to start its monetary policy easing, cutting policy interest rates to a cumulative 50 basis points (bps) and slashing reserve requirements across all financial intermediaries by 250 bps to boost growth.
The Department of Finance (DOF) has been on top of putting forward inflation-mitigating measures through the Economic Development Group (EDG) and the Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO).
With rice being a significant driver of inflation since September 2023 due to global price increases, the DOF collaborated with other government agencies to ease domestic prices of key commodities, including rice, by adjusting tariffs as a short-term measure.
As a result, the President signed and issued Executive Order (EO) No. 62, series 2024 on the Comprehensive Tariff Program 2024-2028 on June 20, 2024.
Implemented in July, the EO includes lowering the tariff on imported rice from 35% to 15%, which contributed to some moderation in retail rice prices in the local market.
In November, rice inflation continued its downtrend to 5.1% from 22.5% in June.
The average retail price of imported rice in the National Capital Region (NCR) fell by about PHP 3.66 per kilogram in the second half of November compared to the second half of June 2024, before EO 62 was implemented.
This price decrease helped offset the impact of food price hikes caused by successive typhoons Nika, Ofel, and Pepito, and the lingering effects of earlier storms in October and the El Niño in the first half of the year.
The continued drop in rice prices, including the set up of more Kadiwa Stores nationwide, has benefitted the bottom 30% of households as headline inflation for the said group declined to 2.9% in November 2024 from 5.8% in July.
To enhance local rice production and address the needs of rice farmers, the DOF supported the extension of the Rice Competitiveness Enhancement Fund (RCEF) until 2031 through the recent enactment of the Amendments to the Agricultural Tariffication Act.
The RCEF has been given an annual appropriation of PHP 30 billion to further improve rice farmers’ competitiveness and income.
It will also support other equally important programs, activities, and projects, including composting facilities for biodegradable wastes; pest and disease management; solar-powered water irrigation or impounding irrigation project; soil health improvement; and farming support programs of the Department of Agriculture (DA) and the National Irrigation Administration (NIA) on contract farming.
Moreover, the DOF led efforts to address inflation of non-food commodities such as fuel, electricity, transportation, and wages.
For instance, toll rate hike exemptions for trucks catering to agricultural goods were carefully studied by the DOF to mitigate the second-round effects of toll rate hikes on food inflation.
With this, the Toll Regulatory Board (TRB) approved the toll rate hike exemption for trucks catering to agricultural goods from April 29, 2024, until the end of the year.
To address rising fuel prices, the DOF collaborated with the Department of Energy (DOE) to implement key measures, such as the phased increase in the biodiesel blend from 2% to 3% which began in October 2024, with further increments to 4% in 2025 and 5% in 2026.
The government also implemented the voluntary adoption of a 20% bioethanol blend for gasoline, effective May 7, 2024.
To mitigate the inflationary impact of electricity rate hikes, the DOF recommended to the Energy Regulatory Commission (ERC) a staggered implementation of at least 12 months in the increase in Malampaya natural gas base prices under the new gas purchase and sale agreement (GSPA) with First Gen Corp. subsidiaries, and MERALCO’s PHP 15.77 billion cost recovery for November to December 2013.
The DOF also coordinated with agencies such as the Land Transportation Franchising and Regulatory Board (LTFRB) and the DA to ensure that targeted support is delivered to vulnerable sectors.