The government is gradually gaining in combating elevated inflation as evidenced in the slowing down of the August inflation rate to 3.3 percent from the 4.4 percent of July.
Before the latest inflation figure was announced, the Bangko Sentral ng Pilipinas (BSP) projected that the August inflation rate would settle between 3.2 to 4 percent, which is still within the 2- to 4-percent projection of government economic planners for this year.
National Statistician Dennis Mapa also said the headline inflation last month was also lower than the 5.3 percent recorded in August 2023.
The latest data brought the year-to-date headline inflation to 3.6 percent, which is within the government's 2- to 4-percent target, according to the Philippine Statistics Authority (PSA).
The good news for consumers is the downtrend in the August inflation was caused by the slower increase in food and non-alcoholic beverages, which settled at 3.9 percent from 6.4 percent in July.
Specifically, food inflation eased to 4.2 percent from 6.7 percent.
The reduction was due to the decline in rice inflation that went down to 14.7 percent from 20.9 percent in July. Rice inflation has been hovering above 20 percent since January this year.
Also, the rice inflation in August is lowest since the 13.2 percent recorded in October 2023.
Rice inflation is expected to go down to a single-digit level this month due to base effects, Mapa said.
Vegetables, tubers, plantains, cooking bananas, and pulses meanwhile, which recorded a year-on-year decline of 4.3 percent in August from 6.1 percent increase in July, also contributed to the slowdown in food inflation.
Lower inflation rates were likewise noted in flour, bread, and other bakery products, pasta products and other cereals, 2.4 percent from 2.6 percent; meat and other parts of slaughtered land animals, 4.0 percent from 4.8 percent; and ready-made food and other food products not elsewhere classified, 5.5 percent from 6.0 percent.
Core inflation meanwhile, which excludes selected food and energy items, slowed down to 2.6 percent in August 2024 from 2.9 percent in the previous month.
BENEFITING HOUSEHOLDS AND BUSINESSES
In a separate statement, the National Economic and Development Authority (NEDA) said the continued easing of inflation and stable prices would significantly benefit households and businesses and will promote increased consumer spending and stimulate economic activity.
“The sustained easing of inflation will support growth in household consumption, which elevated prices have long suppressed. Low-income households will benefit from the decline in food inflation, as food constitutes more than half (51.4 percent) of the consumption of the bottom 30 percent of households,” NEDA Secretary-General Arsenio Balisacan said.
“Moreover, as businesses have identified persistent inflationary pressure as a significant concern, the recent stability and moderation in inflation will encourage investments, especially as borrowing costs are declining. Most importantly, the appetite for business expansion will improve as consumer spending increases,” he added.
Balisacan noted, however, the potential upside pressure could emerge from higher electricity rates and above-normal weather disturbances.
“The government is prepared to address these pressures to ensure stable inflation. Preparations to counter the effects of the La Niña phenomenon are underway, including improvements in early warning systems, the utilization of communication systems to issue warnings about dam openings, measures to address the potential accelerated speed of livestock diseases, and greater involvement of local government units in information dissemination, are in progress. Notably, the government has allocated P15 billion for national risk reduction in 2024,” Balisacan said.
He added that the Department of Agriculture (DA) will expand the Kadiwa ng Pangulo program in the Visayas and Mindanao to enhance access to affordable agricultural products.
The DA is also collaborating with various food manufacturers to supply Kadiwa stores with essential goods, including canned sardines, cooking oil, condiments, fresh fish, and poultry.
Aside from these, the Energy Regulatory Commission (ERC) is also urged to expedite the full implementation of the lower retail competition and open access threshold.
The ERC is considering reducing the threshold from 500 kilowatt (kW) to 100 kW, which would enable more electricity end-users to participate in the program.
“The government will continue to implement measures to reduce further inflationary pressures, including enhancing agricultural productivity, expanding logistics infrastructure, and ensuring the efficient delivery of social services. These efforts are crucial not only for stabilizing prices but also for ensuring that economic growth translates into tangible improvements in the lives of all Filipinos,” Balisacan said.
BSP SEES DOWNWARD TREND
For its part, the BSP said the latest inflation outturn is consistent with its assessment that inflation would revert to the target range in August after the temporary uptick observed in July due to negative base effects and the easing of supply pressures for key food items, particularly rice.
The reduction in rice tariffs will also help in easing inflation in the coming months, the BSP said.
"The balance of risks to the inflation outlook continues to lean toward the downside for 2024 and 2025 with a slight tilt to the upside for 2026. The downside risks are linked mainly to lower import tariffs on rice, while upside risks could come from higher electricity rates and external factors," the BSP said.
The BSP assured that the Monetary Board would continue to take a measured approach in ensuring price stability conducive to balanced and sustainable growth of the economy and employment.
To recall, the Monetary Board decided to reduce key policy rates last August by 25 basis points to 6.25 percent. It has two more meetings this year to decide if another reduction in key policy rate is needed to boost economic growth.
