Increased demand from higher economic activity and supply constraints have put upward pressure on headline inflation for November 2022, which rose to 8.0 percent from the previous month’s 7.7 percent.
Year-to-date (YTD) average inflation increased to 5.6 percent and is expected to remain elevated next month, bringing the full-year inflation assumption to 5.8 percent.
“We expect inflation to moderate within target range in the second half of next year, averaging between 2.5 and 4.5 percent for full year 2023 as global oil and food prices ease,” said Finance Secretary Benjamin Diokno.
According to the Philippine Statistics Authority (PSA), this month’s inflation is the highest since the global financial crisis in November 2008, which was recorded at 9.1 percent.
Department of Finance (DOF) estimates show that electricity, gas, and other fuels remain the highest contributor to inflation at 0.9 percentage point (ppt). Main contributors to the higher food inflation are vegetables (0.7 ppt), meat and food and beverage services (0.6 ppt), fish and other seafood (0.5 ppt), and sugar (0.4 ppt). Passenger transport services and operation of personal transport equipment contributed 0.6 ppt and 0.5 ppt, respectively. Food and beverage services also contributed 0.6 ppt to inflation.
Meanwhile, inflation in the National Capital Region (NCR) decreased to 7.5 percent, from the 7.7 percent in October 2022.
For areas outside the NCR, Region XI (Davao Region) had the highest inflation rate for November 2022, which stood at 9.7 percent. In contrast, the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) had the lowest inflation rate at 6.0 percent.
During its 183rd meeting on December 5, 2022, the Development Budget Coordination Committee (DBCC) slightly adjusted its average inflation rate assumption for 2022 to 5.8 percent from the previous assumption of 4.5 to 5.5 percent given the persisting high prices of food and transport costs.
The DBCC also expects inflation to moderate in the medium-term, reaching 2.5 to 4.5 percent in 2023 before returning to the target range of 2.0 to 4.0 percent in 2024 until 2028.
Despite the sharp increase in inflation, the economic managers reassured the public that the government is committed to take actions that will mitigate the lingering effects of the pandemic and the impact of geopolitical tensions.
“We are hopeful that the public consultation on the extension of Executive Order (EO) No. 171, conducted by the Tariff Commission, will be favorable and help ease food and energy inflation next year. EO 171 reduced the Most Favored Nation tariff rates on pork, rice, corn, and coal and is set to expire by the end of the year,” said Secretary Diokno.
A National Price Coordinating Council (NPCC) meeting was held on December 1, 2022 to discuss the reestablishment of the National Information Network (NIN) pursuant to the Agriculture and Fisheries Modernization Act of 1997. This will help manage the current domestic market conditions.
The inclusion of more detailed regional information on the supply and demand situation and production capacity could facilitate the efficient distribution of locally produced commodities in the country and the development of targeted solutions and capacity building.
The government has intensified its measures to improve local production, increase productivity, and help the agricultural sector rehabilitate and recover from the damages caused by recent typhoons.
Other direct measures to address supply shocks are the continued provision of targeted transport, fertilizer, and fuel subsidies to affected sectors. The government is also ensuring that there is sufficient supply of sugar for domestic consumption. Farmers and fisherfolk will be supported through the KADIWA ni Ani at Kita, which connects producers to consumers in Metro Manila and other areas.
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