AMID expectations that the benign inflation in January will be short-lived, the national government vowed to remain vigilant in averting price spikes especially by closely tracking food supply.
On Tuesday, the Philippine Statistics Authority (PSA) reported that inflation slowed to 2.8 percent, the lowest since the 2.3 percent posted in October 2020 when the country was still on lockdown.
However, economists expect this to be short-lived. HSBC ASEAN economist Aris Dacanay said inflation is expected to rear its ugly head as upside risks to inflation are on the horizon.
“Upside risks to inflation also linger. There are still pending petitions to hike minimum wages and transport fares, not to mention global rice prices that have yet to peak. The current inflation numbers are great, but the economy can’t completely relax just yet,” Dacanay said.
However, the National Economic and Development Authority (Neda) said the administration is bent on monitoring food supply and prices, particularly due to the El Niño phenomenon.
Neda said the severe dry spell has been spreading across more areas. Socioeconomic Planning Secretary Arsenio M. Balisacan said the El Niño is expected to linger until May.
“We [will] introduce stop-gap measures, as necessary, such as allowing further imports on key commodities until our supply stabilizes at prices affordable to consumers while ensuring remunerative prices for local producers,” Balisacan said.
Balisacan said the Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO) will closely monitor the prices of rice and other goods to provide the President and the Cabinet with timely and appropriate policy recommendations and ensure stable and affordable prices of commodities.
Balisacan said the Department of Agriculture will continuously monitor on-the-ground situations and guide the government in addressing food production concerns.
The Philippines recently signed a Memorandum of Understanding with Vietnam for the continuous supply of at least 1.5 to 2 million metric tons of rice annually.
Moreover, the Department of Social Welfare and Development will expand its National Food Stamp program to cover 300,000 households in 2024.
Balisacan said this measure will allow government to help the most vulnerable families during the El Niño season.
Meanwhile, Rizal Commercial Banking Corporation Chief Economist Michael L. Ricafort said the latest inflation print benefitted from the slower year-on-year increase in prices of utilities— housing, water, light, fuel.
Ricafort added that global crude oil prices have lingered at 2-year lows since December 2021. This, he said, helped ease headline inflation in the US and locally towards the target of central banks.
The economist also said the Philippines enjoyed better weather conditions that boosted agriculture production, particularly in the latter part of 2023.
“Slower inflation mathematically largely due to higher base/denominator effects that quantitatively led to slower year-on-year inflation expected up to early 2024,” Ricafort added.
Earlier, the President issued Executive Order No. 50, extending until the end of 2024 the reduced tariff rates of pork, corn, and rice.
He also reactivated the Task Force El Niño through Executive Order No. 53, which tasks concerned agencies to intensify the government’s efforts to secure sufficient water and food supply, power, health, and public safety nationwide.
The President also directed concerned agencies to implement the National Adaptation Plan (NAP) 2023-2050 to increase communities’ resilience against extreme weather disturbances.
DTI chief’s take
From the viewpoint of Trade and Industry Secretary Alfredo E. Pascual, the “significant” deceleration of the inflation rate to 2.8 percent in January 2024, the lowest level since October 2020 or at the height of the pandemic, underscores the government’s “collective efforts and strategic measures” to stabilize prices, among others.
In a statement on Tuesday, the Philippines’s trade chief said, “The significant deceleration of the inflation rate to 2.8 percent in January 2024, the lowest level since October 2020, underscores the government’s collective efforts and strategic measures to stabilize prices, enhance economic resilience, and foster a more predictable environment for businesses and investors.”
According to Pascual, this decline in inflation signifies a “strengthening” economy where businesses can thrive, investments can “flourish,” and the Filipino people can enjoy more affordable goods and services.
“As we move forward, this milestone reinforces our commitment to sustaining economic recovery and growth. It demonstrates our country’s capacity to navigate through challenges and emerge stronger,” he added.