The Inter-agency Committee on Inflation and Market Outlook (IAC-IMO) convened its first principals-level meeting on April 20, 2023 to discuss updates on specific measures to mitigate food and non-food inflation.

The creation of the IAC-IMO was approved in a sectoral meeting on March 7, 2023 by President Ferdinand R. Marcos, Jr. as a proactive measure to fight inflation. It serves as an advisory body to the Economic Development Group (EDG) on measures that will keep inflation, particularly on food and energy, within the government’s target range.

The IAC-IMO is chaired by the National Economic and Development Authority (NEDA) and co-chaired by the Department of Finance (DOF), while the Department of Budget and Management (DBM) serves as the Vice-Chairperson.

Members of the Committee include the Department of Agriculture (DA), Department of Energy (DOE), Department of Science and Technology (DOST), and Department of Trade and Industry (DTI). The DOF also serves as the committee’s Secretariat.

The IAC-IMO has created two sub-committees responsible for the implementation of specific strategic objectives and relevant action plans. The sub-committee on food inflation is chaired by NEDA, with members from the DA, DOF, DTI, DOST, and DBM. Meanwhile, the sub-committee on non-food inflation is chaired by the DOF, with members from the DBM, DOE, DTI, and NEDA.

On food inflation

NEDA Undersecretary Rosemarie Edillon presented short-term measures to manage food inflation:

● Fill the domestic supply gap through timely and adequate importation based on ex-ante supply-demand analysis;

● Strategically preposition rice buffer stocks during El Niño;

● Strengthen the implementation of biosecurity and hog repopulation programs [e.g. Integrated National Swine Production Initiatives for Recovery and Expansion (INSPIRE) program and Babay African Swine Fever (ASF)];

● Improve and expand the Kadiwa program to directly connect producers and consumers; and

● Fast-track the distribution of targeted subsidies to farmers and fisherfolks.

Usec. Edillon further explained that import decisions should take into account the expected lean domestic production period and estimated transit time of commodities from the source country in order to address the domestic supply gap.

Three medium-term measures were also presented to manage food inflation:

● Boost the productivity and resiliency of the local agriculture sector;

● Promote private investment in facilities, transport, and logistics systems to bring safe and nutritious food closer to consumers; and

● Push for the passage of critical reforms i.e. the Livestock, Poultry and Dairy (LPD) Competitiveness and Development Act.

In the medium-term, boosting the local agriculture sector entails improving access to credit and insurance, integrating climate and disaster risks in plans and programs, developing and mainstreaming early warning systems, organizing small farmers to promote clustering, boosting local capabilities on production of agriculture and fisheries inputs, and promoting the adoption of appropriate technologies.

On non-food inflation

DOF Undersecretary Zeno Abenoja presented four short-term interventions to mitigate non-food inflation:

● Implementation of demand management measures;

● Protection of vulnerable sectors through fuel subsidies and targeted cash transfers (TCT);

● Careful review of wage and transport petition hikes; and

● Timely and continued monitoring of non-food inflation indicators.

Measures to manage demand include energy conservation and efficiency proposals to reduce energy consumption through effective load management that could result in lower power demand (e.g. DOE’s flexible work-from-home arrangement). This also includes the promotion of responsible water consumption.

Usec. Abenoja also emphasized the need to carefully consider wage and transport fare hike petitions in order to ensure that inflation is not exacerbated by sudden increases.

Aside from tapping advanced technologies to help with monitoring, the DOE recommends implementing the Household Energy Consumption Survey (HECS) to help improve electricity demand and supply estimates.

As for the medium- and long-term interventions, ensuring water and energy security must be prioritized.

To ensure water security, the government intends to upgrade and expand water infrastructure and strengthen implementation of integrated water resource management.

This includes implementing the Philippine Water Supply and Sanitation Master Plan (PWSSMP), the National Irrigation Master Plan (NIMP), the National Water Security Road Map (NWSRM), and various Flood Master Plans for Metro Manila and major river basins.

For energy, the government will expedite the issuance of local permits for energy projects of national significance in order to achieve total electrification across the country.

The government has also recently opened up the renewable energy (RE) sector to foreign investment in order to improve the energy mix and ensure sustainable energy supply.

The IAC-IMO meeting also tackled the inflation outlook, which was presented by Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco Dakila Jr., as well as the possible creation of an agricultural monitoring dashboard, presented by DBM Undersecretary Maria Francesca Del Rosario.

Next steps

The first sub-committee meeting on food inflation, to be chaired by NEDA, is scheduled in the last week of April. The results of the meeting will be discussed during the first EDG meeting, which is tentatively set on May 11, 2023.

Meanwhile, the second sub-committee meeting on non-food inflation, to be led by the DOF, will be set on May 18, 2023.

The IAC-IMO meeting was attended by DOF Secretary Benjamin Diokno, NEDA Secretary Arsenio Balisacan, DBM Secretary Amenah Pangandaman, DTI Secretary Alfredo Pascual, DOE Secretary Raphael Lotilla, DA Undersecretary Mercedita Sombilla, DOST Undersecretary Leah Buendia, National Statistician Dennis Mapa, and BSP Deputy Governor Francisco Dakila Jr.