DESPITE the easing of inflation in October, the National Economic and Development Authority (Neda) is now bracing for more economic headwinds in the coming months due to an intensified El Niño and the impact on prices of holiday spending.
Among the proposed government measures to keep prices of basic goods stable during the period is the extension of the reduced Most Favored Nation (MFN) tariff rates under Executive Order (EO) No. 10, Series of 2022 until next year.
Last Tuesday, the Philippine Statistics Authority (PSA) reported that the inflation rate significantly slowed down to 4.9 percent in October from 6.1 percent in the previous month.
The improvement was attributed to the deceleration of inflation for food, particularly rice and vegetable due to the onset of the peak of the harvest season.
However, Neda Undersecretary Rosemarie G. Edillon said they are wary of the potential impact of the Christmas season, when workers receive their bonuses and usually buy more goods and services.
The increased spending can translate to a faster inflation like last year, when it rose to 8.1 percent in December from 8 percent in the previous month.
“What is actually important is that we protect those most vulnerable, we make sure that they are able to meet their needs. That is why the subsidy program is important for them and also the food stamp program,” Edillon said in a press briefing in Malacañang last Tuesday.
She said this augmented by the government’s efforts to provide sustainable income to the vulnerable by increasing their employability through skills training as well as bringing in more job-generating investments in the country.
When asked if the Neda will support pending legislated wage hikes, Edillon said they think such measures are unnecessary since the existing wage-setting measures are “working” properly.
Citing the report of the Department of Labor and Employment (DOLE), she said 11 regional wages have issued new wage increases.
EO 10 extension
To keep the price of some basic commodities affordable, the Economic Development Group (EDG) also recommended the extension of EO 10.
The issuance, which will lapse on December, sets the MFN rates for the following goods: meat of swine (fresh, chilled or frozen) at 15 percent (in-quota), 25 percent (out-quota); corn at 5 percent (in-quota) and 15 percent (out-quota); rice at 35 percent; and zero duty for coal.
Edillon said the EDG proposed EO 10 to remain in effect until the end of 2024 “subject to a mid-year review.”
El Niño preparations
NEDA said the government is also making preparations to mitigate the economic impact of the droughts caused by El Niño by the first quarter of 2024.
“This is expected to bring below-normal rainfall across the country and may adversely impact agricultural production and also energy generation,” Edillon said.
She said President Ferdinand R. Marcos, Jr. ordered the Department of Agriculture to provide production support to provinces, which are less “likely to be hit by El Niño” and experience “normal rain” next month.
Such provinces are located in Mindanao, Visayas and Eastern Luzon.
Among the interventions to be provided in the said areas are high-yielding variety of seeds, fertilizers and access to irrigation.
As for farmers in areas which are expected to be severely affected by El Niño, Edillon said they will be given seeds for crops, which have minimal water requirement as well as emergency employment opportunities.
She said the measures are on top of government interventions to address “longstanding challenges in agriculture” through improved farm productivity, additional investment in irrigation, research and development, and post-harvest facilities.
Image credits: Junpinzon | Dreamstime.com