Finance Secretary Ralph G. Recto has expressed optimism that the inflation rate will remain within the government’s target band in 2024 after its decline in June, with the persistent implementation of whole-of-government interventions to ensure that the purchasing power of every Filipino is protected.
“We expect inflation to fall within our 2% to 4% target this year especially after the government has taken decisive and data-driven steps to control the rising price of rice. This will help alleviate the burden of high rice prices that disproportionately affect the poor and vulnerable households,” the Finance chief said.
The inflation rate fell to 3.7% in June 2024 from 3.9% in May and is significantly lower than the median estimate of 3.9% by private sector analysts for the month.
This is also within the Bangko Sentral ng Pilipinas (BSP)’s forecast of 3.4% to 4.2% for June.
Year-to-date, the inflation rate remains at 3.5%, well within the government’s target band.
The June inflation rate dropped mainly due to the sharper slowdown of electricity prices at -13.6% from -8.5% in the previous month.
This led to a substantial slowdown in the inflation rate of housing and utilities to 0.1% in June from 0.9% in May.
Transport inflation likewise decelerated (3.1% from 3.5%) due to slower price increases in gasoline (2.3% from 5.2%).
A decline in inflation was also recorded for restaurants and accommodation services (5.1% from 5.3%).
New whole-of-government interventions to mitigate inflation
While food inflation slightly increased to 6.5% in June from 6.1% in May, the government expects this to slow down once the rice tariff is lowered to 15% from 35%, as embodied in Executive Order (EO) No. 62. This is expected to pull down rice prices by 10%.
EO 62 also maintained the reduced tariff rates on corn, pork, and mechanically deboned meat under EO Nos. 50 and EO 13, s. 2023 until 2028 to further mitigate food inflation, foster policy stability and investment planning, and enhance food security.
This month, the Department of Agriculture (DA) is set to release the implementing guidelines under Administrative Order (AO) No. 20. This seeks to enhance the country’s agricultural importation policy regime by streamlining administrative processes and removing non-tariff barriers.
The DA also launched its large-scale trial of the Bigas 29 program (P29) in ten Kadiwa sites in Metro Manila and Bulacan, offering rice for PHP 29 per kilo to poor families and other vulnerable groups.
By August, the DA aims to double the total number of Kadiwa sites selling subsidized rice and expand their reach to include locations in Visayas and Mindanao.
On the other hand, the Bureau of Customs (BOC) will intensify measures that prevent undervaluation to ensure the correct imposition of duties or taxes on rice imports as well as expedite and prioritize the unloading of imported agricultural products pursuant to AO 20.
Meanwhile, 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.
While the non-food inflation remains low, the government is also closely monitoring its potential drivers and proactively studying possible data-based policies to counter effects.
The Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO) has formally proposed to the Energy Regulatory Commission (ERC) to consider a staggered implementation of MERALCO’s cost recovery to mitigate its inflationary impact.
The ERC also approved the staggered payment plan for the Wholesale Electricity Spot Market (WESM) purchases in June over the next four months, beginning in June 2024.
Subsidy programs are also being implemented by the government to protect the vulnerable sector from the impact of both food and non-food inflation. These are expected to support the purchasing power of Filipinos.
The DA has already distributed PHP 9.23 billion of assistance to 1.2 million farmers and fisherfolk beneficiaries across 8 regions as of June 6, 2024 as interventions on the effects of dry spells and El Niño.
Relative to this, the Department of Social Welfare and Development (DSWD) has provided cash assistance totaling PHP 1.37 billion to farmers and fisherfolk as part of the Presidential Assistance to Farmers, Fisherfolks, and their Families (PAFFF).
The DA has also committed to finish distributing PHP 12 billion in cash assistance under the Rice Farmer Financial Assistance (RFFA) program to rice farmers by September, covering 2.38 million rice farmer-beneficiaries.
For 2024, fuel subsidies amounting to PHP 2.5 billion are allocated for the drivers of jeepneys, taxis, motorcycle delivery services, and tricycles.
Moreover, PHP 510.4 million is earmarked for fisherfolk, and PHP 469.0 million for farmers.
Additionally, the Department of Budget and Management (DBM) is set to release about PHP 27 billion to pay eligible healthcare and non-healthcare workers who served during the COVID-19 pandemic, which will help them cope with inflation.
“We will not be complacent in managing inflation as it is the topmost priority of this administration. Rest assured, the government will remain steadfast in coming up with data-driven policies and interventions for the benefit of the greater population,” Secretary Recto said.
