The government his intensified its efforts to mitigate the effects of the El Niño phenomenon and help keep the inflation rate within target.
The National Economic and Development Authority (NEDA) made the statement on Tuesday after the Philippine Statistics Authority (PSA) reported that headline inflation accelerated to 3.4% in February this year.
The headline inflation during the month was still within the government’s 2 to 4 percent target but higher than the 2.8 percent recorded in January this year.
In a briefing, National Statistician Dennis Mapa said the headline inflation last month however was lower than the 8.6% recorded in February last year. Core inflation which excludes volatile oil and food items slightly went down to 3.6% in February from 3.8% in January.
Mapa said the uptrend in the overall headline inflation in February 2024 was primarily influenced by the higher year-on-year increase in the heavily weighted food and non-alcoholic beverages at 4.6% during the month from 3.5% in the previous month.
Food inflation rose to 4.8% in February from 3.3% in January. Rice inflation in particular went up to 23.7% which Mapa attributed to tight supply and high world rice prices.
The annual increase of transport at 1.2% from an annual decline of 0.3% in January 2024 also contributed to the uptrend in overall inflation.
Mapa said housing, water, electricity, gas, and other fuels also contributed to the uptrend as it recorded a faster annual increase of 0.9% from 0.7% in January 2024.
In a recent statement, the Bangko Sentral ng Pilipinas (BSP) said the latest inflation data is within its forecast range of 2.8 to 3.6%.
The central bank said that while the BSP expects inflation to remain within target in the first quarter of the year, inflation could temporarily accelerate above the target range in the second quarter due to the adverse impact of El Niño phenomenon on agricultural production and positive base effects.
“The risks to the inflation outlook have receded but remain tilted upside. The upside risks to the inflation forecasts are linked mainly to higher transport charges, hiked electricity rates, higher oil, and domestic food prices, and the additional impact on food prices of a strong El Niño episode,” the BSP said.
The BSP said the Monetary Board deems it appropriate to keep the BSP’s monetary policy settings unchanged in the near term amid the improvement in inflation conditions.
“The BSP also continues to support the National Government’s non-monetary measures to address supply-side pressures on prices and sustain the disinflation process,” the central bank said.
NEDA Secretary Arsenio Balisacan said the government would continue monitoring food supply and prices and implement necessary policies and strategies to ensure affordable and adequate food for Filipino families, especially those from the most vulnerable sectors.
“As we navigate the economic landscape, it is imperative that we remain vigilant and proactive in our approach to managing inflationary pressures. While we have seen some relief from certain inflation risks, we must not become complacent. The potential impact of a strong El Niño weather pattern on food prices is a significant concern for our community,” he said in a separate statement.
“Rising transportation costs, electricity rates, and volatile oil markets are putting pressure on household finances. Our team is actively formulating robust strategies with the concerned agencies in response to these challenges. We must be agile, adaptive, and forward-thinking,” Balisacan added.
International rice prices have started to ease, and local supply is expected to increase with the dry season harvest beginning this month until April, he said. He added that the Department of Agriculture is closely collaborating with the International Rice Research Institute to increase the country’s rice production.
Meanwhile, the next phase of the vaccine test for African Swine Fever is awaiting Food and Drug Administration approval, he said. Once the ASF vaccine is proven effective, the government will roll out a vaccination campaign to help ensure adequate pork supply in the country, he added.
For his part, Department of Finance (DOF) Secretary Ralph Recto has assured the public that the government has a comprehensive plan in place to keep the prices of goods and services stable and affordable.
In a statement, Recto said the Reduce Emerging Inflation Now (REIN) plan will help keep the inflation rate within manageable levels, especially with the looming threat of the El Niño.
“As I have said before, reducing inflation and protecting the purchasing power of Filipinos is a top priority of this administration. The government and the Bangko Sentral ng Pilipinas [BSP] are working in sync to ensure that both non-monetary and monetary measures prioritize growth and price stability,” he said.
Recto said he is closely monitoring the implementation of strategies under the REIN plan. Among these is prioritizing the expeditious execution of the 2024 national budget to enable the timely implementation of measures aimed at enhancing agricultural production.
The Department of Budget and Management has already approved the release of P455.59 million for the Rice Competitiveness Enhancement Fund for the first quarter of 2024 to fund programs focusing on farm productivity and food security.
The government will also continue the distribution of fertilizer discount vouchers to sustain crop production amid El Niño.
Exploring more rice trade agreements is also part of the government’s plan to ensure a stable supply of rice. Apart from ongoing rice trade deals with India and Vietnam, the government is in talks with Cambodia.
Recto said the government is also accelerating the implementation of the El Niño Mitigation and Adaptation Plan and responses to address the impact of typhoons.
It also ensures timely and sufficient imports of key commodities based on more frequent analysis of demand and supply conditions while combating anti-competitive practices.
The government will soon release the guidelines for the implementation of the toll rate hike exemption for trucks catering to agricultural goods. (PNA)
