Finance Secretary Ralph G. Recto has assured the public that the inflation rate in July is likely a one-time uptick due to high base effects and is expected to temper and fall within target for the rest of the year as government interventions take full effect.

“Pansamantala lamang ang pagtaas ng inflation rate nitong Hulyo dahil sa tinatawag nating base effect sa presyo ng bigas. Para masukat ang pagbilis o pagbagal ng pagtaas o pagbaba ng presyo ng mga bilihin, inihahambing po natin ito sa presyo ng mga bilihin noong Hulyo ng nakaraang taon kung saan hindi pa masyadong tumaas ang presyo ng bigas,” the Finance Chief explained.

Headline inflation in July 2024 reached 4.4%, bringing the year-to-date (YTD) average inflation to 3.7%. This is still within the government’s target band of 3% to 4% for the year.

This was primarily driven by higher inflation in both food and non-food items, with upticks in liquefied petroleum gas (LPG), fuel, meat, and fruits. The slower reduction of electricity and fish prices also led to the increase in inflation.

Notably, rice inflation slowed down to 20.9% in July from 22.5% in June driven by a month-on-month reduction in the retail price of milled, well-milled, and special rice, ranging from -0.20% -0.33%.

“Inflation rate is expected to stabilize and fall within target for the rest of the year as the impact of government interventions, particularly the reduced rice tariffs, will be more pronounced starting this August. Although, we might see slight increases in vegetable prices due to damages brought by Typhoon Carina in the agriculture sector,” he added.

Local retail prices of rice only gradually decreased in July as local traders are still expending their inventories, which were initially purchased at high prices prior to the implementation of the Executive Order (EO) No. 62.

Secretary Recto further assured the public that the decline in retail prices of rice will become more apparent in the coming months as the volume of rice imports at lower tariff is anticipated to increase and augment local supply.

To ensure food security, the Department of Finance (DOF) is supporting the planned increase in the Rice Competitiveness Enhancement Fund (RCEF) to improve the productivity, profitability, and competitiveness of local rice farmers.

Meanwhile, the President’s recent ban on Philippine Offshore Gaming Operations (POGOs) is expected to lower the demand for housing rentals and office spaces, thereby helping temper rental prices.

To mitigate the effects of the uptick in electricity prices, the Energy Regulatory Commission (ERC) has ordered the staggered implementation of charges from Wholesale Electricity Spot Market (WESM) purchases in June over four equal monthly installments from June up to September 2024.

To lessen the impact of food and non-food inflation on the vulnerable sector, the government continues to provide fuel and cash subsidies, with a proposed increase in the budget for ayudas such as cash allowances for the Pantawid Pamilyang Pilipino Program (4Ps) in the 2025 national budget.

This increases the total cash grant for all the schemes under the 4Ps to PHP 3,550 from PHP 2,850.