The Philippine Statistics Authority (PSA) reported that the headline inflation rate accelerated to 6.4 percent year-on-year (YOY) in August 2018, faster than the previous month’s 5.7 percent and the 2.6 percent of the same period last year. This brings the year-to-date inflation rate to 4.8 percent, beyond the upper-band of the government’s inflation target of 2 to 4 percent, and slightly below the BSP’s revised full-year inflation forecast of 4.9 percent. Meanwhile, month-on-month inflation (MOM) accelerated to 0.9 percent, from 0.5 percent in July 2018.
The highest contributors to inflation in August are electricity, gas, fuels, fish, rice, personal transport, vegetables, and meat. Reforms in agriculture will continuously be implemented to address the supply issues causing the rise in food prices. This is supported by the lowest regional inflation rate recorded in the food-abundant and agriculturally-productive Region III at 3.6 percent. A committed effort from government in the agriculture sector to boost supply of key products and introduce policy reforms will bring down prices for all Filipino families.
An initial meeting was conducted today, September 5, 2018, with the Department of Finance (DOF), the Department of Budget and Management (DBM), the National Economic and Development Authority (NEDA), the Department of Trade and Industry (DTI), the Department of Agriculture (DA), the Department of Justice (DOJ), the Bangko Sentral ng Pilipinas (BSP), the Bureau of the Treasury (BTr), and some members of the National Food Authority (NFA) Council to address food inflation. Immediate reforms for reducing food prices include the following:
a.) On fish, the Department of Agriculture (DA) has committed to replicating the issuance of certificates of necessity to allow imports to be distributed in the wet markets in Metro Manila and to the other markets of the country.
b.) On rice supply issues, 4.6 million sacks of rice available in NFA warehouses will be immediately released to the market across the country. We also expect approximately 2.0 million sacks of rice previously contracted to be delivered before the end of September. In addition, the NFA Council authorized the importation of 5.0 million sacks that will be arriving over the next one and half months and another 5.0 million sacks will be imported early next year. To address the reported shortage in Zamboanga, Basilan, Sulu, and Tawi-tawi, 2.7 million sacks will be allocated to these areas. In addition, harvest has also started in many parts of the country, with the projected harvest for 2018 of 12.6 million MT of rice, the equivalent of 252 million sacks.
c.) The economic managers have agreed to recommend to the President the issuance of a directive to further simplify and streamline the licensing procedures for rice imports of the NFA. Moreover, we urge the Senate to immediately pass the Rice Tariffication Bill within the month.
d.) The DTI, NFA, Philippine National Police (PNP), National Bureau of Investigation (NBI), and farmer groups will form a monitoring team for surveillance of rice from ports to NFA warehouses and retail outlets.
e.) On chicken, to reduce the gap between the farm gate and retail prices, DA and DTI will convene poultry producers and setup public markets where producers can sell directly to the end customer. DA will provide cold storage for this purpose.
f.) The Sugar Regulatory Administration (SRA) will open importation of sugar to direct users to moderate costs to consumers.
g.) The spike in the prices of vegetables was attributed to seasonal weather conditions. We will see relief in this area after the typhoon season.
h.) The Bureau of Customs will prioritize the release of essential food items in the ports.
The government’s economic team has previously announced that inflation is expected to peak in the third quarter before tapering off towards the latter part of the year, and then fall within the government’s target by next year. However, inflation in August was beyond the median market forecast. We remain steadfast in putting forward and accelerating these measures that will address food prices for all Filipinos.