THE reopening of the economy may be driving commodity prices to increase as inflation nationwide averaged 6.3 percent in August, according to the Philippine Statistics Authority (PSA).
On Tuesday, National Statistician Claire Dennis S. Mapa said that while inflation in August was slower than the 6.4 percent posted in July 2022, all commodity groups posted price increases.
The slowdown, Mapa said, was mainly caused by the recent rollback in pump prices as well as the arrival of fish imports. However, the start of the new school year, among others, has increased house rental rates and electricity prices.
“What’s clear here is [the role of] housing, water, electricity, gas, and other fuels because of their weight [in the Consumer Price Index]. We’ve seen rentals contributing to this also because as you know, it’s August and back to school and house rentals are rising,” Mapa explained, partly in Filipino.
Based on PSA data, the inflation for actual rentals for housing increased 3.1 percent in August 2022 year on year compared to July 2022.
Mapa said housing rental accounts for 12.81 percentage points or more than half of the weight of the housing, water, electricity, gas, and other fuels commodity group in inflation whose weight in the CPI is 21.4 percent.
This was followed by the increase in Electricity, Gas and Other Fuels prices—CPI weight of 4.6 percent. Inflation of Electricity, Gas and Other Fuels reached 15.7 percent year on year in August 2022 and 1.9 percent compared to July 2022.
Mapa also noted an increase in Maintenance, Repair and Security of the Dwelling which include construction material prices. Data showed inflation of the Maintenance, Repair and Security of the Dwelling reached 3.7 percent year on year and 0.3 percent month on month in August 2022.
Apart from these, Mapa said education services posted an inflation of 3.8 percent year on year in
August 2022. Education services have a weight of 1.9 percent in the CPI. “[This increase is because of] tuition [specifically] tertiary education [and] early childhood and primary education.”
Restaurant and accommodation services also posted an increase in inflation of 4.1 percent. This, Mapa said, is composed of meals consumed outside of the home and accounts for 9.6 percent of the CPI.
This, he said, reflects the price adjustments made by cafeterias, carinderias, and restaurants in light of recent developments.
Mapa added that core inflation, which excludes volatile food and energy items that are in the headline inflation, also stood at 4.6 percent in August 2022. Core inflation was at 3.9 percent in July 2022 and 2.8 percent in August last year.
The National Economic and Development Authority (Neda) traced the slowdown in August inflation mainly to the government’s subsidy programs and its interventions to transform the country’s farming and food systems to ease the impact of global inflationary pressures and protect the purchasing power of Filipinos.
Inflation of food and non-alcoholic beverages was partly offset by the slower inflation of meat, fish, and vegetables due to the various government interventions including improvements in local pork production and timely arrival of imported pork.
“Recovery is uneven within countries and across countries, and this results in very inefficient supply chains. This is expected to be temporary as markets transition to find the new balance between supply and demand. The situation is made worse by the protracted Russia-Ukraine war, and the country’s weather disturbances particularly La Niña. These serve to magnify the low productivity in our agricultural sector, which needs to be supported immediately,” Socioeconomic Planning Secretary Arsenio M. Balisacan explained.
“It is our top priority to ensure that Filipino households have sufficient and healthy food on their table, especially the poorer sector of the society. We will continue implementing programs that reduce transport and logistics costs to bring inflation down and to protect the purchasing power of our consumers. Most importantly, it is imperative to transform Philippine agriculture into a dynamic and productive sector to speed up our recovery and significantly reduce poverty in the country,” he added.
To boost domestic supply, the government will continue to support agriculture through lower input costs, innovation in farming, extension of financial assistance to farmers, and boosting the agricultural value chain.
“In the short-term, we need to boost our recovery momentum, while making sure that the most disadvantaged sectors of the country are assisted. Simultaneously, we need to invest in medium-term solutions to improve productivity, especially in agriculture, and build resilience among consumers and producers,” Balisacan added.
Neda said, however, that the global oil outlook remained uncertain amid the slowdown in major economies and other geopolitical risks.
To temper the effect of high fuel prices, the government is providing fuel discounts to farmers and fisherfolk. More than 158,000 eligible farmers and fisherfolk are each set to receive P3,000 as fuel discounts to help cushion the impact of higher fuel prices.
As of August 17, 2022, a total of 131,145 accounts for target beneficiaries have been created nationwide, 120,827 accounts of which were loaded with fuel discounts and 42,084 cards distributed to corn farmers and fisherfolk.
The Department of Budget and Management has approved the release of P1.4 billion additional funds to support the extension of the Libreng Sakay Program for passengers of the EDSA Bus Carousel until yearend. This will support up to 50 million riders, including workers and students who are back to face-to-face schooling.
Image credits: Nonoy Lacza